Richard Martin Blog: Cisco’s Umi Costly, But No Mistake

The critics who’ve bashed Cisco’s Umi home telepresence system are missing the point. Umi (it’s actually spelled with a lower-case “u" and an bar over the u – “you-me," get it?) not only has a terrible brand name but an outrageous price tag of $600 for the hardware and 25 bucks a month for the service fee (even though it just runs on top of your existing broadband connection).

That’s high, especially in a sluggish economy, and it’s not going to lead to mass-market sales numbers.

“Cisco has got to be kidding if they think people are going to line up to buy their Umi home video conferencing system," wrote Eric Savitz on Barron’s Tech Trader Daily blog. “It is simply crazy expensive at a time when you can buy a cheap Webcam and video chat over the Internet via Skype, Google Talk or other service for almost zero additional equipment cost and no additional service fee."

That’s true, but anyone who thinks Cisco is releasing this product to sell millions of units is, simply, crazy. This is Cisco’s version of the Nexus One, from Google: a prototype product to test the waters, gauge consumer interest and bait the hook for future, lower-priced versions to follow.

The original RCA 12" TV set cost $600 in 1939, which is $9170 in today’s dollars. Not many were sold. Twenty years later just about every household in America had a TV, and today you can buy a decent HD flat-screen for less than $1000. Cisco, like the search engine giant, can afford to take the long view. If it sells a few thousand units of the Umi, John Chambers will be happy, confident that his eventual successor will sell millions.

One little-noticed detail in the Umi specs is the Cisco proprietary video-compression technology that enables HD telepresence to be available over typical residential broadband connections. (Credit to Light Reading’s Craig Matsumoto for noticing.) Umi comes out just as the H.264 video compression standard is starting to take hold across many different conferencing platforms. Polycom recently said its H.264 High Profile system will slash the amount of bandwidth needed for HD telepresence and video conferencing by up to half.

As HD video becomes available over more broadband and semi-broadband connections, it’s going to take off. I wouldn’t wager my life savings on when, exactly – but then, Cisco’s not doing that either.

Many, many families are now fiddling with Skype and Google Talk to explore the possibilities of home telepresence. Many are frustrated with the almost-free services. Some well-off fraction of those (1 percent? 3 percent?) are going to say the hell with it and slap down $900 for a year’s worth of Umi service. They’re going to tell a few friends how cool it is. And before you know it – well, okay, before your kids know it – telepresence in the living room will be as common as HD TVs.