Cisco looks to connect, finally, with a low-cost video conferencing play

Baseball pitcher Satchel Paige once said "Don't look back, something might be gaining on you."

This week's announcement from Cisco (Nasdaq: CSCO) that it was introducing a $99-a-month video conferencing service, Cisco TelePresence Callway, aimed at the SMB market is a pretty good indication that the networking giant and leader in the video conferencing space didn't take Satchel's sage advice. And that may be a good thing.

Cisco said the hosted service reduces the complexity and costs of TelePresence that slowed adoption by SMBs. Cisco also introduced Jabber Video, a standards-based, HD video-calling software application that lets Mac and PC users join a conference hosted by a TelePresence user. The free application will go into beta in 2012.

There's no question Cisco, which introduced its benchmark room-based TelePresence system five years ago isn't at risk of being overtaken by any of its competitors and time soon; it does, after all, have a market share that exceeds 50 percent.

The reality may be more along the lines that Cisco recognized the danger that all of its competition was nibbling at its lead; call it the Grand Canyon effect... a little bit of water over a long period of time can create a pretty big hole.

Infonetics Research earlier this month said revenues from enterprise telepresence and video conferencing systems were way up in the first half of this year, 24 percent above a year ago. The global video conferencing and telepresence equipment market set a record for quarterly revenue in the second quarter, increasing 21 percent from the previous quarter to $683 million, and increasing year-over-year 34 percent. Infonetics predicted an increase for the entire year that would be in the "strong double digits."

The enterprise segment has long been a target of the biggest video conferencing vendors, and projections have long said there was big money to be made in the segment.

But SMBs and smaller enterprise customers have begun to look more appealing to the segment, especially as travel costs continue to be a bugaboo, and companies look to contain costs in the economy of what feels like a perpetual (perceptual?) recession.

Infonetics says the market should see double-digit growth through 2015, "thanks to demographic and communication trends favoring video, increasing acceptance of video among users, and specific use cases like telelearning and telemedicine."

The past couple of months have seen a markedly different picture of video conferencing emerging.

Polycom (Nasdaq: PLCM), Radvision (Nasdaq: RVSN) and startup Vidyo all have introduced new mobile clients, aimed especially at tablets and at a workforce that's spending more time than ever away from the office. And, nearly every other vendor has introduced some low-cost iteration of their video conferencing product aimed at expanding down market.

Cisco was taken to task earlier this year for a lack of innovation. And CEO John Chambers spent two quarters trying to reshape the company (and perhaps trying to reignite that innovation spark). Callway may not be Cisco's biggest innovative leap, but at least it looks like it wants to get back in the game.-Jim