Cisco is getting a lot of attention today as it unveiled a new video conferencing system that promises to make video calling feel close to human contact. For the most part, video phones have been a dud, but there is a market on the corporate side. Several big companies have bought expensive video conferencing systems, in hopes of seeing reduced travel bills and other advantages conferred by high quality visual contact. By all accounts, the Cisco product sounds quite impressive, and offers much better quality than most other products on the market. But at the same time it feels like Cisco is going in the opposite direction of where the real action is. While it's developing ever more complex and expensive communication systems, in hopes of capturing the "next $1 billion market", it's cheap communication technologies that will be the most transformative to business. But because the company is seeing fresh competition in core areas like corporate phone systems, it has to move up the food chain. That's what we're seeing across many industries in fact. As Microsoft faces competition from cheap web-based apps, it's set to drop its biggest, most complex version of Windows yet. As the film industry is attacked on the low end by people with cheap production equipment and new ways of distribution, it's responded by making bigger and bigger films. The hope for these incumbent players is that the market bifurcates, and that there's room for light and cheap products as well as premium ones that they can charge a lot for.
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