Blue Jeans Network brings Skype, Cisco users together

March 21, 2012: 9:00 AM ET

The Mountain View, Calif. startup is offering a cloud-based product that unites groups of users of several different videoconferencing services.

FORTUNE -- Videoconferencing has become (almost) mainstream, but there are still plenty of challenges getting different technologies like Cisco's (CSCO) TelePresence and Skype to work together. In industry-speak, that's called interoperability -- or lack thereof.

Enter Blue Jeans Network, a Mountain View, Calif.-based startup that says it's found a solution to the problem. The company makes money by selling a cloud-based service that enables everyday Skype or Google Chat users to videoconference with users of much pricier room-based systems -- sort of like an audio bridge for video calls. Up until recently, Blue Jeans wasn't competing with the makers of videoconferencing solutions, like Cisco and Polycom (PLCM). It was just providing a web-based tool for customers of the various video vendors to conference with each other, even if they weren't using the same equipment. But now the small company is trying to position its product as an alternative to at least one slice of the underlying video infrastructure pie, multipoint control units (MCUs), or devices that enable videoconferences between three or more users.

Traditional MCUs connect between large videoconferencing systems, and don't work with desktop or mobile solutions like Skype. Blue Jeans started out allowing different flavors of videoconferencing technology to work together, but says it realized along the way that its service can also replace MCUs. To that end, on Wednesday Blue Jeans said it plans to market its cloud-based service as an MCU replacement by licensing virtual ports for $300 a pop (each endpoint, like a Skype user on a laptop or employees in a Cisco TelePresence room, will require its own port).

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At least on the surface, the new pricing structure seems more marketing ploy than actual innovation -- the underlying product is still the same, just packaged differently. But according to Blue Jeans, IT professionals aren't used to buying videoconferencing capabilities by the minute, which is one way the company has sold its service up until now.

"At the end of the day we think what we're doing makes the videoconferencing market bigger," says Stu Aaron, chief commercial officer at Blue Jeans. "Everybody's benefiting from a bigger pie, but there will be winners and losers. And yes, there is some admitted overlap with a piece of their portfolio."

Cisco -- one of the largest players in videoconferencing infrastructure, including MCUs -- says it's working on "industry standardization efforts and the next generation of interoperability protocols."

"Presently the business-to-business telepresence market does have broad interoperability among the primary vendors (including Polycom, Lifesize and others)," OJ Winge, senior vice president and general manager of Cisco's collaboration endpoints technology group, said in an emailed statement. "Cisco's perspective is that interoperability needs to be standards-driven, ensuring ease of use and maximum return on customers' investments."

Interestingly, Cisco is fighting Microsoft's (MSFT) proposed acquisition of Skype, on grounds that the duo's technologies don't play nice with competing videoconferencing tools.

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Meanwhile, Blue Jeans says it is the "only multipoint bridging solution that can allow a single video conference to include participants on room-based systems, desktops, and mobile devices that are running a variety of popular business and consumer video endpoints from Cisco, Polycom, Skype, Microsoft, Lifesize, Google, and more."

It's still early days for Blue Jeans. The company launched its service just last June, after raising $23.5 million from Accel Partners, New Enterprise Associates, and Norwest Venture Partners. But companies like Foursquare are already using Blue Jeans to make video calls between Cisco TelePresence users in the office and employees using Skype on the go.

"We could easily have two Cisco units in our offices talking to each other but someone in Kentucky wouldn't be able to join the conversation," says Derek Stewart, Foursquare's director of finance and operations.

Despite Blue Jeans' push to position itself as an alternative to MCUs, the company is mostly an enhancement -- not a threat -- to existing videoconference equipment makers. And whichever company ends up leading the charge, there's no question that interoperability is an inevitable must in videoconferencing, just like it was in text messaging on mobile phones. The more use corporate customers can get out of their videoconferencing systems, the more they'll invest in buying them. That's good for Cisco, Polycom, Skype and Blue Jeans.

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About This Author
Michal Lev-Ram
Michal Lev-Ram
Writer, Fortune

Based in Silicon Valley, Michal Lev-Ram covers enterprise and mobile technologies for FORTUNE. Prior to joining FORTUNE, she wrote for CNNMoney, Fast Company, Popular Science and other business and technology publications. She was also a staff writer at Business 2.0 and holds a B.A. in journalism from San Francisco State University.

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