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TV Telepresence “Two Years Away” From Major Acceptance – Cisco’s CEO

by User Not Found | 2月 02, 2011

During this week’s C-Scape analyst conference in London, Cisco’s Chairman and CEO, John Chambers, admitted that the company’s high end consumer telepresence initiative, Umi, is at least two years away from reaching significant volumes and “major acceptance”. He also indicated regret at the fact that the service had not been available before the 2010 selling season, and that it would be late 2011 before the company could be sure how well the business was performing.

As my colleague, Ben Piper, reported at the time of Umi’s launch, initial pricing levels were likely to be a major barrier to Umi’s adoption. 30% of people in our US survey of 2000 respondents indicated interest in the telepresence concept, but many of those same people are also keen not have any further monthly expenditures appearing on their bank statements. As much as the $599 initial purchase fee (or $1198 if you account for the need for a minimum of two systems for a conversation to take place), it is the $24.99 monthly fee which is likely to prove a strong deterrent to potential buyers.




Surprisingly, perhaps, John Chambers was prepared to accept that Umi is a longer, rather than near, term opportunity, however strategically important consumer telepresence remains to Cisco’s video network vision. This caution also explains to some degree why Cisco was prepared to take on the role of service provider in Umi’s early days, since it believes traditional service providers like telcos and cablecos need to be educated or persuaded on telepresence’s potential to drive ARPUs and help customer retention.


Cisco’s problem is that the window for Umi to capture a high end telepresence customer base may be fairly narrow. Connected TV-based solutions such as Skype are likely to increase their market penetration significantly over the next 24 months. Perhaps even more significant, we are likely to see growing home-based adoption of video conferencing on other non-PC platforms such as tablets and smartphones. These alternatives clearly will not offer the same big screen, high quality experience as Umi, but they could have both positive and negative impacts on Umi: on the one hand it will be argued that they “prove the concept” of mass market videoconferencing; on the other, they may eat into the early adopter market Umi is targeting, and, moreover, set the market price at much lower price points.


Service providers, in spite of early Umi partnerships such as Cisco/Verizon, will be watching closely for signs that alternative solutions are genuine competitors as this market emerges. They are unlikely to be blinded into making significant upfront investments by the temptation of additional ARPUs until further substantial evidence of Umi’s potential is demonstrated.

David Mercer

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