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Cisco seeks a new angle for Umi

The consumer videoconferencing system may shift toward work calls

By , IDG News Service
April 12, 2011 08:16 PM ET

IDG News Service - Cisco's Umi home videoconferencing system, the most extravagant and futuristic part of the company's consumer product line, seems to be in search of an identity amid the consumer reorganization that the company announced on Tuesday.

Cisco plans to integrate Umi with its Business TelePresence line and sell it through enterprise and service provider channels, according to a brief statement that outlined the company's shake-up of its consumer businesses. As part of the same reorganization, Cisco plans to discontinue the Flip video camera, "refocus the Home Networking business for profitability" and look at other possibilities for its Eos media business. The moves come after weak financial results that led Chairman and CEO John Chambers to call for a refocusing of the company.

While the company remains committed to video and collaboration as top priorities, it is shifting emphasis away from its consumer businesses, which have not performed well recently. The reorganization may turn Umi into something quite different from its original concept.

Umi was designed to bring Cisco's TelePresence technology into homes for video get-togethers among family and friends. It uses a console and a set-top camera and microphone along with the customer's own HDTV. But the system seems to have debuted, in October 2010, at too high a price. The equipment cost US$599 and required a service for $24.99 per month. Last month, Cisco cut the price of that gear to $499 and introduced a slightly lower-quality version for $399, while cutting the service cost to $99 per year or $9.95 per month. The cheaper box also required less bandwidth.

Analysts said cost, especially the service charge, has dogged the product.

"There just weren't enough features there to get people to pay," said Yankee Group analyst Zeus Kerravala.

Now Cisco says it is re-examining retail distribution of Umi, which has used one main store partner, the Magnolia high-end electronics departments in Best Buy stores. Cisco spokeswoman Karen Tillman did not say the product is definitely leaving Magnolia, but said the retail strategy is under review. The other go-to-market plans Cisco is looking at -- carriers and enterprise -- raise questions about the future shape of Umi.

Bundling Umi with broadband Internet access and other services may be the best way to sell the systems to consumers, Parks Associates analyst Kurt Scherf said. A carrier or cable operator that was already selling several services to a household might be able to throw Umi in for a fairly small incremental cost, Scherf said. Consumers might be more interested in that type of offering, he said.

"Throwing a large upfront price point at them, plus a large monthly subscription, was just not the way that you were going to encourage uptake of this," he said.

Cisco would prefer to go through service providers anyway, Scherf said. "They want to feed the service providers the solutions and allow the companies that have the most direct contact with the customers [to] be able to successfully sell those," he said.

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