Google video chat

Cisco's new Umi: The answer to a question nobody asked

October 8, 2010: 12:13 PM ET

The company says its new video chatting device is just what people want. But a look at the competition -- and $600 price point -- doesn't seem to bode well for its chances.

There had better be an elite group of videochatters out there with cash to burn. Otherwise, Cisco Systems will be in trouble with its video-calling system, Umi. Cisco (CSCO) says it has done the market research to back up the device's release.

But if Umi fails, it will represent a larger problem for Cisco and other big tech companies that, having made fortunes developing products for enterprise, are now turning toward consumers. Namely, that they have to be in touch with consumer behavior, and devices like the Umi don't make it seem like that's the case. For videochatting to work, lots of people have to buy these devices, and though they support Google video Chat, the company clearly hopes users chat "Umi to Umi." But the price is so high that it will probably prevent widespread adoption.

The fact that there's a price at all could be a problem, let alone that it's $599. Not only does Cisco have to carve out a market for a device-dependent service that's already ubiquitous, but the company also has to convince consumers to pay for videochatting when competing products are free. More

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