Cisco (NASDAQ:CSCO) is bringing telepresence to your living room via its Umi system, but don’t be surprised if the healthcare and education markets tag along too.
Umi has been billed as a consumer play. The system has an HD camera, console and remote and is designed to connect you and your family in an immersive experience. The system retails for $599 with a $25 a month service fee for calls, video messaging and storage. Cisco will sell Umi on its site, Best Buy and through Verizon FiOS in 2011.
A few key points about the Umi are readily clear:
- This thing won’t go mass market quickly. Why? You need upload speeds of 1.5Mbps and 3.5Mbps for 720p and 1080p video quality, respectively. That means consumers may have to upgrade. With those upload speeds it’s obvious why Cisco is working with FiOS first. You need a fiber optic pipe to your house to get the maximum experience out of Umi.
- The price may be restrictive out of the gate. “We believe Cisco faces a tough road convincing a weakened consumer to invest in Cisco Umi given the availability of lower cost/lower bandwidth alternatives from Skype, Logitech, Google, and others,” said Wells Fargo analyst Jess Lubert.
- For Umi to really be a hit you need families to buy into the systems. You buy Umi and then get your grandparents in Colorado to get one too. Then you have immersive magic.
- Cisco reckons only 32 million households have the broadband pipes and HDTVs to make Umi work.
While Umi may be a touch expensive for the living room, corporations may be running to Best Buy (NYSE:BBY). Why? Umi is a lot cheaper than a telepresence system. And it just may be good enough.
Stifel Nicolaus analyst Sanjiv Wadhwani connects the dots:
Given the upload speed requirements and availability of low-cost/free video chat solutions, a compelling user experience will be important in driving market adoption. The solution could see uptake in select vertical markets such as education and healthcare services that may have previously been priced out of an enterprise class telepresence solution. While there may be some risk of cannibalizing low-end telepresence sales, ultimately, more video endpoints supports network infrastructure sales.
That point is right on target. If you run a doctor’s office or a cash-strapped educational institution why wouldn’t the Umi look like a contender?
Cisco appears to be trying to thread the consumer/business needle here. Cisco’s rollout of Umi featured things like YouTube, Facebook and Google Chat interoperability. Cisco also noted that Umi lacks management tools, unified communications integration and other enterprise features.
However, for a smaller business those enterprise features may not be necessary. The Umi may do just fine. Umi launched as consumer, but rest assured it’ll be a business tool first.