Summary
1) Standalone videoconferencing endpoints are destined to go the way of dedicated word processing equipment in the late 1970's. 2) Cisco (NASDAQ:CSCO) along with telecom carriers and innovative new companies like Vidyo (privately held) are providing competition to incumbents Tandberg (Oslo: TAA) and Polycom (NASDAQ: PLCM). 3) New entrants are delivering videoconferencing as part of unified communications offerings, service providers are delivering dedicated network services and a full suite of management offerings, and there is a growing consumer market.
Analysis
As end users are continuing to look for ways to realize the benefits of videoconferencing, companies such as Cisco (NASDAQ: CSCO), Verizon (NASDAQ: VZ), and AT&T (NASDAQ: T) are seeking ways to drive business and consumer demand. The videoconferencing landscape is changing and disruptive technologies and innovative new approaches are needed.
My belief is that the standalone videoconferencing endpoints will go the way of word processing equipment back in the late 1970’s. During that time companies such as Wang, CPT, NBI, and Lanier offered very sophisticated (and expensive) standalone units that were much easier to use than a PC. However with the advent of WordPerfect and MicroSoft Word (NASDAQ: MSFT) and the predominance of PC users, these stand along units quickly became obsolete and forgotten. We will likely see the same with video as dedicated videoconferencing equipment is not needed except for corporate TelePresence applications. Incumbents such as Tandberg (Oslo: TAA), and Polycom (NASDAQ: PLCM) will face competition from new entrants and vendors that deliver videoconferencing as part of unified communications offerings and service providers that deliver dedicated network services and a full suite of management offerings for the high end business user. There will be a growing consumer market as well.
“Cisco's TelePresence products are winning users among corporate customers, which buy the equipment to reduce travel expenses" per a July 10, 2009 article published in gulfnews.com titled “Networking Giant Focuses on TV Video Conferencing” view article. Orders for the systems, which range from about $84,000 to more than $300,000, increased more than 70 per cent in Cisco's latest quarter, ended April 24. In May last year, the company introduced a personal model for private offices that costs $33,900. Corporate TelePresence systems, which have dedicated rooms with cameras and flat-panel TVs, transmit life-size images. The consumer service will focus on combining video communication with entertainment, such as sharing clips of home movies.” “In addition to holding video chats, users will also be able to exchange messages and leave videos for friends” said Ned Hooper, head of the consumer business at Cisco.”
“Cisco, the largest maker of networking gear, is accelerating its push into the consumer market. In May, the company bought Pure Digital Technologies Inc. The Flip, maker of the Flip video camera, for $590 million. Cisco plans to use software from that company to expand in the market for home-networking gear, camcorders and video applications, which will grow 50 per cent to $60 billion by 2013, Hooper said.”
“Video, which Chief Executive Officer John Chambers has called "the killer app", needs more bandwidth than voice and data, pushing service providers and consumers to buy more gear to accommodate the bigger loads. Internet traffic will grow fourfold by 2013 as video consumption increases, San Jose, California-based Cisco said last month. Video now accounts for a third of consumer web traffic and will jump to 91 per cent by 2013, Cisco said.”
Today the options for videoconferencing range from the high end TelePresence suite to systems designed for conference room use, to executive desktop solutions, to personal use solutions with a webcam and software that can easily convert a PC into a visual communications platform that can use any wired or wireless platform. This is perfect for the mobile or teleworker or for anyone who has a PC and does not want to invest a sizeable amount of capital and be locked into a videoconferencing endpoint solution that will become obsolete quickly. I also anticipate new innovative options for the consumer such as having video chat capability via your home TV.
Having experienced most videoconferencing options, I recently was quite impressed with a solution from Vidyo (privately held). Vidyo won the Frost and Sullivan 2009 North American Conferencing and Collaboration Product of the Year Award . I was able to quickly and easily load the Vidyo client, put a webcam on my laptop, connect a USB headset (or echo cancelling speakerphones), and was ready to go utilizing an internet connection. The ease of making a call and the quality was just as good as a dedicated HD endpoint unit. This solution is sold via an annual subscription model for ports and seats not requiring the upfront investment for videoconferencing endpoint equipment, which will soon become obsolete. This is the wave of the future.
And for corporate users, my choice is the AT&T TelePresence offering. This combines the power of the Cisco TelePresence solution with AT&T’s networking capabilities including a multipoint meet-me bridging capability. It is also a managed service allowing you to avoid upfront capital costs and protect yourself from technology obsolescence.
And I must say that I look forward to having Video chat on my home TV.
