Cisco Systems, the "plumber of the Internet," is taking a bold step into the video market -- a move executives believe will define the future of the company.

On Monday in the US, the networking giant unveiled a video conferencing package called Cisco TelePresence Meeting. It's designed to bring a new level of quality to videoconferencing, so that participants feel like they are actually sitting in the same room with people who may be half way around the world. The product is slated to be available in December.

Cisco is offering two versions of the product. TelePresence 3000 is meant for meetings of 12 people or more, around a virtual table. The stripped-down version, Cisco TelePresence 1000, is designed for small group meetings and for one-on-one conversations.

Cisco believed high-definition, two-way video technology marked a pivotal juncture in its evolution from a supplier of infrastructure equipment into a video and communications provider.

Cisco CEO John Chambers has said that he expects the videoconferencing market to generate US$1 billion in annual revenue within the next five years.

Whether the technology will live up to its hype is still unclear, but many analysts are sceptical.

"I know that John Chambers and everyone else at Cisco is incredibly excited about this technology," said Ellen Daley, an analyst at Forrester Research. "But IP routers changed how everyone communicates. The telepresence solution is cool, but it's expensive. And it won't bring virtual meetings to the masses."

Daley pointed out, all this high-definition technology doesn't come cheap. The single-screen version costs about US$79,000, and the conference room version costs US$299,000. Those prices include all the necessary equipment and installation.

Also, high-definition video requires a super-fast IP connection with a low level of latency, so businesses will be required to subscribe to a premium data service from a telecommunications carrier.