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Vidyo rolls out low-cost video-conferencing

By Tarmo Virki, European Technology Correspondent

TALLINN (Reuters) - Start-up Vidyo unveiled a low-cost video-conferencing product on Wednesday that could intensify competition and hurt margins for Cisco Systems Inc and Polycom Inc.

Co-founder and Chief Executive Officer Ofer Shapiro told Reuters Vidyo, which has raised $74 million from investors, including Menlo Ventures and Rho Ventures, hopes to go public well before 2015.

New Jersey-based Vidyo, whose software platform is used by Google Inc, Hitachi Ltd and Ricoh Co Ltd, claims it cuts the cost of video-conferencing dramatically.

Vidyo said its systems incorporating up to nine screens would cost $44,000, compared with about $300,000 to $500,000 for three to four screens from other vendors. Such systems also need costly, dedicated network technology.

Shapiro said he hoped lower prices would attract a wider range of customers.

Research firm Ovum forecast last month that the market for high-end video-conferencing will grow an average of 19 percent each year through 2016, when it will hit $1.1 billion.

"Cost has been the single biggest barrier to the adoption of tele-presence (video-conferencing)," Yankee Group analyst Zeus Kerravala said.

Shapiro said in an interview from New Jersey via Vidyo's own conferencing system: "The market will expand. We are still going to make tons of margins on those prices."

(Editing by Andre Grenon)