Cisco cuts pricing on HD home video conferencing

Cisco Systems said today that it will cut the price of its consumer video-conferencing product called Umi.

The product, which first hit the market in October, will now come in two versions. The original product, which transmits video in 1080p resolution, will cost $499 instead of $599. And the company will offer a $399 version that offers 720p video resolution. There will also be a free software client available for PCs and Macs later this year.

The service will be reduced from $25 a month to $99 for the year or $9.95 a month.

While Cisco maintains it is pleased with sales of the high-definition consumer-oriented telepresence system, one executive admitted there have been hurdles to broader adoption. The main barrier has been the fact that people interested in using the Umi system had to have an Umi camera and box on the other side of the call for it to work. On the original product the high-definition camera, which shows images in 1080p resolution, required that people have at least a 3.5Mbps connection both on the upstream as well as the downstream on the connection.

Cisco decided to introduce a lower-end version of the product that transmits signals at a resolution of 720p and only requires 1.5Mbps for downloads and uploads. And for people who still don't have a fast-enough connection, they can download a free client onto their PC or Macs to participate in the call.

"We've been pleased with sales results so far," said Gina Clark, vice president and general manger of Cisco's Umi product line. "But we found one of the barriers to buying the product was that some of the people that our Umi customers wanted to talk to couldn't get a fast-enough broadband connection to support it."

Cisco has been pitching Umi not as a competitor or alternative to Skype's free online video-conferencing service, but as a totally new experience. For one, Umi video is better quality, transmitting in HD. Cisco also provides an experience where the whole room is included in the video conference experience.

But for this new experience, consumers will have to pay much more than they do for Skype or for other video-conferencing applications such as Apple's FaceTime, which is available for the iPhone 4 as well as the upcoming iPad 2. These applications are free. By contrast Umi requires a substantial investment in equipment. And it also has a recurring monthly charge.

Cisco wouldn't say that the Umi is priced too high for most consumers, but Clark admitted that the service likely won't appeal to everyone.

"This is a product for people who are very close with friends and family and really want to keep in touch with them," she said. "In our early customer base, we see a lot of interaction within families between children and cousins or with grandma and grandpa. Is it for everyone? No, but we think there is a market."