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Cisco's Tough Sell for Videoconferencing

Cheaper software undercuts the company’s telepresence

John Chambers, the chief executive officer of Cisco Systems, used to call telepresence his favorite new technology. In 2006, the year Cisco unveiled videoconferencing hardware priced as high as $300,000 per system, Chambers said it would set records for how fast it became a $1 billion business. “This is the first time in my career that I have seen this type of excitement and interest from CEOs for a technology,” he said a year later on an earnings call.

It turns out CEO enthusiasm isn’t enough to sustain a market. Cisco’s telepresence revenue has been mired in a two-year slump, adding to the company’s broader struggle to reverse sales declines. Pacific Crest Securities analyst Brent Bracelin estimates that the products accounted for 1 percent to 2 percent of Cisco’s $12.1 billion in quarterly revenue. (The company doesn’t disclose sales from telepresence.)