Cisco’s dropping the price of Umi by 20% and cutting the monthly service fee by 75% to $499 and $9.95/month. These price reductions came with an announcement of support for interoperability with Cisco TelePresence rooms and a Mac and PC clients.

The Mac and PC clients are useful so travelers could video home from a hotel and say good night to their spouses and kids while on the road without having to bring a redundant box and camera with them. The interoperability with TelePresence rooms is a little too much. Not many consumers want to do a telepresence session with their local GE or Cisco or Bank of America executive.

This is a stupid move and will only result in further margin erosion for the company. Many enterprises with telepresence at home plans will consider expanding their telepresence-at-home offering to include this little device and service, which of course will sell for less in volume. Hardly a consumer application. In fact, this move could cannibalize sales of home office video solutions which have higher priced and higher margins.

Even still, the company totally misunderstood the consumer sensitivity points around price/value. Of course, if they had subscribed to our Consumer subscription service, they’d be able to make much more intelligent decisions. Sigh…

Nevertheless, this simply proves that Cisco still doesn’t get it when it comes to consumer video communications. They have technology they are rushing to commoditize, even when common sense dictates that there is no way for Cisco or Cisco shareholders to win at this.

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