Cisco's umi gets panned

Home TelePresence system just too pricey for a mass videochatting market that doesn't exist

Cisco's new umi home TelePresence system has apparently missed the mark. It is being panned by analysts as a pricey luxury in search of a market - beyond the deep pocketed niche that might be the only one that can afford it.

Cisco's umi costs $600 for equipment plus a recurring charge of $25 per month, on top of what consumers already pay their service provider for broadband Internet access.

As IDG News Service's Stephen Lawson reported yesterday in his umi launch coverage, a Parks Associate analyst notes that only 20% of broadband households use "dirt-cheap" webcams and free videoconferencing services - Skype, etc. - today. With this kind of underwhelming penetration for the lowest cost stuff, what kind of demand will umi stoke in the market?

Very little, note these analysts, whose thoughts were compiled in this post by Tech Trader's Eric Savitz. Motley Fool also noted the tomfoolery of umi's pricing.

Indeed, umi currently will appeal to only a very specific niche market of people who find Skype and other freebies inadequate for their videochatting needs - a subset of that 20% Parks Associates cites that use webcams and "dirt-cheap" videoconferencing.

Cisco figures that 1 million people use its current TelePresence systems, which are tailored and priced for business applications, every day. The company also guesses that 30 million U.S. households are equipped to use umi now, while 60 million may be equipped to do so in the next two years.

But how many actually will? The concept and technology are gee-whiz for sure, but the price might keep it on the shelf, according to a bulletin issued this week by Ticonderoga Securities:

Providing a high-quality, HD 1080p video calling solution (720 recording) in a consumer's living room is a compelling proposition for a certain part of the market in our view but is not likely to be a mass market product in the near term at current price points.

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