Cisco Systems acted to make its Umi home videoconferencing platform more affordable on Monday, slashing the service cost to $99 per year and announcing a $399 product for slower Internet connections as well as free Mac and PC clients.

Umi, an extension of Cisco's high end TelePresence line for enterprises, debuted last October for $599, with a service fee of $24.99 per month. Many industry observers said the market for such an expensive consumer product would be limited. Though Cisco said Monday that it has been pleased with sales of Umi so far, its first major extension of the line clearly targets price.

The new Umi system delivers resolution as high as 720p, and is designed to work on a home broadband connection with 1.5Mbps (bit-per-second) downstream and upstream speed.

By comparison, the original unit offers 1080p resolution and is intended for 3.5Mbps symmetric broadband, a service that relatively few US consumers have in their homes. Both can adapt to slower speeds, Cisco says. Cisco also cut the price of the 1080p product. The new service price, available in a monthly subscription option as well as the annual fee, is the same for both hardware platforms.

Demand for the less expensive offerings came from current Umi customers who want to be able to enjoy videoconferences with friends and family who may not be able to afford the original product or don't have the high-speed Internet access it uses, said Gina Clark, vice president and general manager of Cisco's Consumer TelePresence Business Unit.

"It certainly helps to grow those consumer calling circles," Clark said.

Cisco also sees the free Cisco Umi Connect software for Macs and PCs primarily as an expansion option for users of the home systems, even though anyone can download the software free. Some features of the full TV-based Umi experience may not be included in the software, but a user's full Umi contact list will be available, Clark said. Umi Connect could be used by friends or family members who are travelling or living in a college dorm, Clark said. The software is in beta trials and scheduled to become available this summer, according to Cisco.

Also on Monday, Cisco announced it is making Umi interoperate with its enterprise TelePresence systems. The main purpose of this is not tele-working, Clark said. For that, Cisco still recommends enterprise offerings such as its desktop TelePresence product, which has more features for sharing information, she said. Instead, enterprises in areas such as education and healthcare wanted this compatibility so they could conduct immersive communication sessions with consumers. Healthcare applications are in trials now, Clark said.

The Cisco Umi 720, which will include an HD camera, a console and a remote, is scheduled to go on sale early in the summer.

Cisco's price cuts, especially on the service fee, should help it sell more Umi systems, analysts said.

"It certainly is going to encourage consumers who may have been on the fence," said Parks Associates analyst Kurt Scherf. Service providers are an ideal sales channel for the systems, and success will depend in part on how much the carriers subsidize the equipment cost or discount the service through bundling, he said. Verizon Communications plans to offer Umi to users of its FiOS high speed broadband service this year.

While less expensive gear will help to attract customers, the reduction in the service fee is the most important step Cisco has taken, said Wainhouse Research analyst Ira Weinstein.

"Changing the monthly fee, we think, is changing the entire thought process around the offering," Weinstein said. A monthly charge of just under $10 is the kind of service fee that many consumers could set up and basically forget about, he said.

Even though Cisco said it integrated Umi with TelePresence primarily for business-to-consumer use, both analysts believe a lot of enterprises will be interested in setting up home workers with Umi. Now that their conferencing options are growing, companies and workers will deploy the tools that make sense for them, Weinstein said. For example, some employees may sit in front of a TV using Umi while running WebEx on a laptop for data sharing.

"We're going to see a lot of permutations, and combinations, and hybrid meetings, and the good news is, that's the way it should be," Weinstein said.

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