By lowering the price of its umi video calling system, it's clear that Cisco (Nasdaq: CSCO) has realized that no matter how compelling residential video calling could be, mainstream consumers don't want to pay a premium for what is still a relatively nascent service.
Earlier this week, Cisco announced that it has lowered the price of its ūmi 1080 from $599 to $499 in addition to launched its ūmi 720 version that only requires 1.5 Mbps of bandwidth for $399. In addition, the vendor has lowered the monthly service fee prices for umi from $24.99 to $9.95 a month.
Consumers can purchase Cisco's ūmi 1080 at Best Buy Magnolia and at bestbuy.com, while the Cisco ūmi 720 will be available early this summer.
Touting its ability to provide what it says is "truly immersive and lifelike video experience that fits into every home," each Cisco umi unit comes with an HD camera, a console and a remote.
While the umi system marked another major push by the routing vendor into the consumer market, industry analysts questioned how Cisco would be able to create a critical mass at a time when consumers can access free video services such as Skype.
It appears that Cisco has taken this criticism to hear and has indeed realized that it will be able reach a broader audience with a lower-priced video calling service.
"We are pleased with the response to umi so far but we do believe the new price point...will accelerate adoption further and faster," said Gina Clark, vice president and general manager of Cisco's consumer telepresence business, in an e-mailed statement.
But Cisco's drive to lower the price of umi perhaps reflects the vendor's overall challenge to serve the consumer market-one where it has product revenues decline 15 percent in its fiscal second quarter earnings. Such declines have prompted some industry watchers to wonder if Cisco should consider selling off its consumer lines and refocus its attention on its traditional routing and switching business.
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