Cisco to take on Skype

The networking giant is set to bring its high-end videoconferencing technology into the home office -- and the living room.

By TheStreet Staff Oct 4, 2010 1:03PM

thestreetBy James Rogers, TheStreet

 

Cisco (CSCO) is set to bring its high-end videoconferencing technology into the home, according to The Wall Street Journal, marking the next big push in the company's consumer products strategy.

 

Cisco hasn't officially announced the venture, although it will likely come during a Cisco Web cast scheduled for Wednesday. In a press release, Cisco heralds the event as "a new consumer experience."

 

Citing a person briefed on the matter, the Journal reports that the Cisco system includes a video camera and a device that connects to high-definition TVs. The system will be priced at $600, with a $300 monthly subscription fee.

 

Cisco is also likely to draw on its telepresence technology for the new announcement. A form of high-end videoconferencing, Cisco's telepresence was initially aimed at corporations, but the company has hinted that it intends to push the tech into home offices.

At the CES show in Las Vegas earlier this year, Cisco CEO John Chambers ran a series of demos using telepresence to speak with people in other parts of the U.S., including his wife in the San Francisco Bay Area.

 

Although Chambers didn't unveil new products during his hour-long presentation, he promised that Cisco's video strategy will be completely "device agnostic." Video, for example, is seen as an ideal use of tablet computers such as Apple's (AAPL) iPad.

 

The tech bellwether has made inroads with video over the past few years, acquiring Norwegian videoconferencing specialist Tandberg last year and Flip camera maker Pure Digital.

 

During Cisco's recent fourth-quarter conference call, Chambers said the Tandberg acquisition, combined with telepresence, brought in revenue of approximately $370 million, a 40% hike over the same period last year. While a drop in the ocean compared with Cisco's total revenue of $10.8 billion, videoconferencing has become a cornerstone of the company's long-term strategy.

 

Chambers has already predicted a home-entertainment revolution, which he says will see the worlds of TV and Internet collide. In addition to opening a new revenue stream, an increase in video traffic will drive demand for Cisco's core networking gear.

 

Of course, as Cisco continues its push into the consumer market, a new videoconferencing-at-home venture would pit the company against established players like Webcam maker Logitech (LOGI) and Skype.

 

Shares of Cisco dipped 31 cents, or 1.4%, to $21.60 on Monday as the Nasdaq slipped 1.4%.

 

"Cisco will be announcing a new consumer product at a press event in San Francisco on October 6th, 2010," a Cisco spokesman confirmed via e-mail to TheStreet. The company, however, has no additional details to provide at this time, he added.

 

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