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Can You See Me Now? Not at These Video Phone Prices

Posted on: Wednesday, 17 August 2005, 21:00 CDT

Aug. 17--Hal Krisbergh says he's realized his long-sought goal of bringing to market a high-quality video phone. His next trick, he said yesterday, is to lower the price.

"I believe very strongly that the major hurdles to deploy video telephony have been overcome but for one: price," Krisbergh said during a conference call for investors in his WorldGate Communications Corp in Trevose. "At $799 retail, this is not a mass-market product."

He promised to spend $17.5 million from a private placement of common stock earlier this month on efforts to lower the price and to develop additional related products, including a portable video phone.

Not that the Ojo is not selling. In its second-quarter financial statement, released Monday after the close of the market, WorldGate reported $1.8 million in revenue, all of it from the sale of Ojo units, which became available in May.

He said that represented the first significant revenue for the company in four years, when its previous incarnation as a producer of interactive-television software fizzled in the dot-com meltdown.

Krisbergh declined to say how many Ojo units had been sold.

Ojo's marketing is being buoyed by Motorola Inc.'s Connected Home Solutions business in Horsham. Motorola manufactures the phone in Taiwan. Krisbergh said Motorola had used its marketing muscle to place the product in about 250 retail sites, including Tweeter electronics stores and the Hammacher Schlemmer & Co. Web site.

Ojo works best over high-speed Internet connections, and the connection service that makes it work is provided by WorldGate. The company is aggressively pursuing deals to have other Internet phone service providers sell the phone at a steep discount, in the same way that cell-phone providers supplement the cost of cell phones.

But until those agreements are reached, Krisbergh said yesterday, WorldGate may soon start offering discounts of its own. To reach mass-market territory, Krisbergh said, the price would have to be in the $400 to $500 range, if not lower.

"We can get there two ways," he said in an interview after the conference call. "We can reduce the cost of manufacturing, and we can offer subsidies."

A subsidy provided by WorldGate at the wholesale level would likely be twice as big at the retail level, he said.

Early sales figures have been eye-opening, Krisbergh said. He noted that 15 percent of the sales had been to deaf consumers, and businesses have bought more of the phones than he expected.

The portable version of Ojo, which would allow users to have face-to-face conversations over a cellular phone, is less than a year away, Krisbergh said.

But he demurred at investors' requests for more details about that product and other plans. "I don't want to be giving competitors a lot of ideas," he said.

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Source: The Philadelphia Inquirer

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