That's Just Dumb, Cisco

If you've ever dreamed of The Jetsons' video teleconferencing vision of the future, have deep pockets, and have somehow slept through the past several years, has Cisco (Nasdaq: CSCO  ) got a gadget for you!

Cisco unveiled the Umi Telepresence yesterday, the enterprise networking giant's first push into consumer videoconferencing.

It's a neat product, but the Umi will gain zero traction because of a stiff price tag that would even make Rosie the robotic maid blush.

Yes, HD video calling on existing high-def televisions is cool. The Umi's spec sheet is impressive. However, there aren't too many people who will line up to pay $600 for the device -- much less the $25 a month subscription required to actually use the thing.

Rip van Winkle may be jumping for joy, but those of us who haven't dozed off over the past few years are right to be skeptical. $25 a month for unlimited Umi calls, video messaging, and video storage isn't much of a deal after forking over $600 for the system itself.

They may not be HD, but Google (Nasdaq: GOOG  ) and Apple (Nasdaq: AAPL  ) offer wi-fi video chat platforms for free. In a fitting "in your face" coup, Logitech (Nasdaq: LOGI  ) trumped Cisco's announcement several hours later. Buy a $300 Logitech Revue powered by Google TV, and a $150 Logitech TV Cam, and you can be videoconferencing in high-def without the monthly bills.

Cisco will still try to nab the stupid. The Umi will be marketed through Best Buy (NYSE: BBY  ) . It's going to get some serious exposure on Oprah Winfrey's show. A mall tour kicks off next month, providing live demonstrations. The Umi will be actively marketed to Verizon's (NYSE: VZ  ) FiOS customers.

It's still going to flop, adult industry usage notwithstanding.

After all, if $600 up front and $300 a year seems outlandish, ask yourself who you're going to call? If you want to visually chat up your parents or grandchildren in high-def, you'll need two Umi systems and subscriptions. Sure, the system can also suboptimally work with Google video chat, but other interoperability is sorely lacking. How many people will keep the network effect going? How many will buy this thing, find that they couldn't hoodwink anyone else into signing up, and make a beeline to the Best Buy return counter?

This will be a textbook case of subtraction by multiplication.

Nice try, Cisco. An angry Mr. Spacely will see you now.

Is Rick wrong? Does the Cisco Umi have a shot? Share your thoughts in the comment box below.

Best Buy and Google are Motley Fool Inside Value picks. Google is a Motley Fool Rule Breakers recommendation. Apple and Best Buy are Motley Fool Stock Advisor picks. Logitech International SA is a Motley Fool Hidden Gems pick. The Fool has written calls (Bull Call Spread) on Cisco Systems. Motley Fool Options has recommended buying calls on Best Buy. Motley Fool Options has recommended a write covered strangle position on Logitech International SA. The Fool owns shares of Apple, Best Buy, Google, and Logitech International SA. Try any of our Foolish newsletter services free for 30 days. True to its name, The Motley Fool is made up of a motley assortment of writers and analysts, each with a unique perspective; sometimes we agree, sometimes we disagree, but we all believe in the power of learning from each other through our Foolish community.

Longtime Fool contributor Rick Munarrizthinks that some calls are better off heard and not seen. He does not own shares in any of the stocks in this story. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy, and it has no problem video calling you in the buff.


Read/Post Comments (2) | Recommend This Article (8)

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  • Report this Comment On October 07, 2010, at 11:50 AM, kutani123 wrote:

    Yep...This is a DUMP DUMP decision..

    Skype is FREE, good in sound, quality video and perfectly good for consumer in tele conf particular in this bad economy, high jobless.

    Who really needs this new toy though..

    NOT much people will spend $600 and 25/month service fee..

    Sorry Cisco can't beat the free service NO matter what good your product is...

    This is dump decision from Cisco in this consumer market..

    Seems like they don't know how to growth company in this consumer market.

    Analyst out there already doubt about their consumer strategy with acquisition of Scientific Atlanta, Linksys, Flip Video as NONE of them turned to $1B market as John Chamber expects..

    Wait and see what they do with just acquired Tanberg, perhaps the same poor result

    Watch how/what Tony Bates will help Skype to beat Cisco!!!

  • Report this Comment On October 07, 2010, at 12:31 PM, crlowryjr wrote:

    I'll definitely agree with the crowd ... the marketing group seems to have missed the boat. I have no idea why anybody would pay $300 a year for what you can get for free. This is not a 'Best Buy' kinda product.

    There is a market for it however ... Execs and the Technorati. There are numerous CTS level Telepresence units installed at hotels and 'important people's' homes ... and at $200k+ the costs of Umi is a Deal.

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