The network equipment maker will introduce a video camera and device that will connect to people's high-definition TVs and make it possible for them to do video-conferencing over the Internet, The Wall Street Journal reported Thursday. The system will reportedly cost $600 with a $30 per month service subscription. Cisco on Thursday declined comment.
Cisco, whose core business remains selling switches and routers to businesses and telecommunication companies, uses the term "telepresence" to describe its video-conferencing products. The systems tap the Internet as the communication pipeline and are part of Cisco's overall strategy of supplying a growing number of products for moving video over the Internet.
The strategy makes sense given the increasing amount of online video being delivered to Websites, smartphones, tablet computers and just about any other video-capable, Internet-connected device. In July, for example, 178 million U.S. Internet users watched an average of 14.7 hours of online vide, according to ComScore.
But while video watching is growing, telepresence, a business Cisco has been in since 2006, remains a small portion of the overall number of group videoconferencing units sold. According to research firm TeleSpan, telepresence accounted for just 3% of unit shipments to businesses.
Cisco's competitors in the business market include large tech companies like Hewlett-Packard, Polycom, LifeSize Communications, Teliris and Huawei Technologies. However, in the consumer market, Cisco will be competing against makers of cheap webcams and low-priced video-conferencing services such as Skype.
In addition, smartphone makers are adding video conferencing to their devices. Apple, for example, introduced video calling on the iPhone in June with the introduction of the fourth version of the smartphone. With such inexpensive and, in the case of smartphones, more convenient means of video calling, it's difficult to see why people would want to spend several hundred dollars on equipment, plus an additional subscription fee.
"It's going to be a very nichey market and price is going to be going against them," Amanda Sabia, analyst for Gartner, said of Cisco's reported plans.
A recent survey by Gartner showed that roughly 20% of people from ages 13 to 74 do video calling today, which amounts to about 24 million U.S households. In time, that market is expected to increase.
"It's a market that will eventually grow, but it will be a very slow adoption into the mainstream," Sabia said.
Nevertheless, from a technical standpoint, the consumer market is more ready than ever for video conferencing. The majority of U.S. households today have high-speed Internet connections and high-definition flat-panel TVs are ubiquitous.
Cisco has been building out its telepresence technology through acquisitions. The company recently bought conferencing specialist Tandberg ASA for $3.3 billion. On the consumer side, Cisco in March 2009 paid $590 million for Pure Digital Technologies, maker of the easy-to-use and inexpensive Flip video recorder.
Cisco claims its telepresence line has become one of the fastest-growing internally developed products in the company's history. Cisco counts 600 telepresence customers worldwide, including 50 of the Fortune 500. Overall, the companies encompass 3,000 installed systems, with the hottest verticals being telecom, banking, healthcare and government.