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New videophone highlights dropping prices

Product lets people make videophone calls by dialing someone's number from an IM-like window on a PC.

Avaya and Polycom unveiled on Monday an Internet videophone for businesses, adding to a growing lineup of more affordable, easier-to-use gear of the sort once seen only in newspaper comic strips.

Networking gear maker Avaya will sell camera maker Polycom's ViaVideo II video camera for PCs, packaged with an Avaya Softphone. The combo is designed to let people make video or phone calls by dialing someone's number from an IM-like window on a PC. If the recipient's setup is also video-enabled, the call goes through as video. If not, the call automatically switches to voice only.

At $429 for the phone and software, the Polycom-Avaya endeavor highlights the plummeting price of videophones, and how they're becoming much easier to set up and use. Just a half decade ago, videoconferencing systems were $40,000, came with a 30-plus-inch screen that required an IT staffer to set up and operate, and used traditional phone networks. Now, it's the norm to find sub-$400 videophones and unlimited video calling via the Internet for $30 a month, and the gear plugs into most laptops or routers.

Along with Avaya, Net-phone provider Packet8 sells a videophone that plugs into most routers for $360 if purchased with a Packet8 video and broadband telephone calling plan. Do-it-yourselfers can find cheaper videophones by searching eBay, where $200 was the highest bid on a pair of Vialta Beamer BM-80 videophones a day before auction's end.

Who now uses videophones and the accompanying tools to allow any number of people to collaborate on, say, the design of a PowerPoint presentation?

Not a lot of people yet, according to industry experts. By year's end, revenue from sales of video-calling gear will be little more than $40 million, though that adds up to a 23 percent annual increase from last year, according to analysis company Point Topic.

Most videophones are used by hobbyists, or by businesses trying to reduce the need for travel by using videoconferences. A number of real estate, insurance and financial companies also use them, according to Avaya senior product manager Greg Brophy.

But plummeting prices for videophone equipment, and the spread of high-speed Net connections to more offices and homes, will lead to a billion-dollar market by 2008, according to analysis company Wainhouse Research. Avaya intends to push the price tag down even further, to about $200 for the combined software-hardware package, by next year. That will "really get this market going," Brophy said.