Blue Jeans Network

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." More

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