What was Cisco (Nasdaq: CSCO) thinking last fall when it figured consumers would pay $600 for a consumer videoconferencing gadget for their TVs, and $25 a month for service?
It seemed ridiculous at the time, and eventually Cisco got the message. It slashed prices on the hardware back in March during the sobering repositioning of its consumer business, dropping its monthly service fee to just $10.
Things are getting even more desperate, since Cisco's offering "buy one, get one free" hardware deals this week through Amazon.com.
Well, if common sense didn't do Cisco's Umi in, another potential killer is on the way. Comcast (Nasdaq: CMCSK) (Nasdaq: CMCSA) is announcing that it will be offering high-def Skype calls to its couch potatoes in the coming months.
This could be huge. Skype -- which is in the process of being bought by Microsoft (Nasdaq: MSFT) -- has hundreds of millions of registered users. Comcast watches over 22.8 million cable subscribers, with 17.4 million of them relying on the company for online connectivity.
The catch, of course, is that Comcast isn't ready to disclose pricing.
The success of this service will all boil down to what it actually costs, since it apparently won't be free. After all, Comcast users will need to buy -- or lease -- a Comcast hardware package that includes an adaptor box, a high-quality video camera, and a multi-functional remote control.
It will be cool. Friends will be able to video chat, text, or make audio calls while their favorite shows are on. Making the most of the viral nature of Skype, Facebook contacts can be easily imported. Unlike Umi, where you're limited to that rare fellow Umi owner or someone using Google's (Nasdaq: GOOG) fledgling video chat solution, Comcast offers broader videoconferencing opportunities with the massive universe of Skype users.
What will it cost, though?
Comcast will probably blow this opportunity. I'm foolishly paying $16 a month for a Comcast DVR with HD service on top of my already outrageous cable bill. There's a reason why Comcast has been shedding net video customers over the past few quarters: The company overestimates both its market position and what the market will bear.
Instead of using the Skype package as a way to boost its retention rate, it's probably going to see this as yet another juicy profit center. It won't subsidize the hardware and make the service available at no additional cost -- and that will be a dealbreaker for most penny-pinching couch potatoes. Skype's popularity, naturally, stems from the fact that it's absolutely free when one Skype user calls another.
Logitech's (Nasdaq: LOGI) Revue -- powered by Google TV -- is now down to $200. Throw in a $150 Logitech TV Cam, and you can be videoconferencing in high-def through your TV without paying anything else. Apple's (Nasdaq: AAPL) free FaceTime platform will also continue to grow, and it's really just a matter of time before Apple begins selling its own cam-equipped TVs.
I'd love to be wrong, but I'd bet you my overpriced Comcast DVR that this company is about to duplicate Cisco's mistake.
How much would you pay to make and receive Skype calls through your TV? Share your thoughts in the comment box below.
