Cisco's (Nasdaq: CSCO ) Umi is a flop.
The networking giant was hoping to make a big splash with the Umi Telepresence, Cisco's first foray into consumer videoconferencing.
"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 got a gadget for you," I wrote at the time.
Carrying a "stiff price tag that would even make Rosie the robotic maid blush," Cisco thought it would be able to sell a high-def video chat platform for $600, paired up with chunky $25 a month subscription plans.
Cisco overestimated the high-end market's potential. It also underestimated consumer intelligence. The Umi couldn't compete with subscription-free videoconferencing platforms put out by Google (Nasdaq: GOOG ) , Apple (Nasdaq: AAPL ) , and Skype.
Logitech's (Nasdaq: LOGI ) $300 Revue powered by Google TV -- paired with a $150 Logitech TV Cam -- could get friends and families videoconferencing in high-def without the monthly charges! Apple's FaceTime and Skype will continue to grow their user bases.
Well, Cisco sort of gets it now. This week it announced that it would be slashing the Umi's price by $100. It's also introducing a 720p model for those who don't need 1080p at a $399 price point.
Cisco's saving its biggest cut for its monthly plans. A 60% haircut now finds Umi connectivity only costing $9.95 a month or $99 a year.
It's a strong step in the right direction, but it's not going to be enough.
Maybe the better strategy would have been to go through Vonage (NYSE: VG ) or other broadband telephone providers as a premium add-on for their existing voice customers.
The problem with Umi's out-of-whack pricing is that this is a product that requires a wide user base to work. You don't buy a Umi unless you know others already on the system. The emotional push of visually uniting long-distance families rings hollow when every home has to meet the tech requirements and have the financial means to bankroll the three-figure hardware investment and the $99 annual connectivity fee.
Viral means never having to pay a monthly usage fee when it competes with tech giants who have dramatically cheaper workarounds.
Maybe this is it. This could be as low as Cisco could conceivably go on price before it throws in the towel. By this point next year, Umi may be the next FloTV corporate discard. Cisco can't keep playing limbo forever. It obviously doesn't want to cheapen this offering to the point where it hurts its more lucrative enterprise videoconferencing. However, if an ordinary guy like me saw this "flop" coming months ago, why didn't a company that at one point commanded the country's largest market cap didn't see it?
One can't go through life with Umi-tinted glasses.
Will premium consumer videoconferencing ever take off? Share your thoughts in the comment box below.