Sex, lies and videoconferencing

Videoconferencing is no longer the preserve of the multinationals. The move to IP has cut the cost of dial-up telephone charges and more companies are starting to realise its benefits. Paul Bray looks at what this could mean to the channel

Just a few years ago, conducting a videoconference involved trooping off to a meeting room full of expensive kit, getting a white-coated boffin to initiate the call, hoping the people on the other end of the line were using compatible equipment, and paying high telephone charges to watch images that were often of indifferent quality.

Today, accordiing to the videoconferencing (VC) industry, the picture is very different. “Huge strides have been made in ease of use, reliability, ease of deployment and price/performance,” said Tony Heyworth, EMEA marketing director at VC vendor, Polycom. “VC is easy, accessible and very high quality, and there is no need for the IT department to set up the call. You can communicate with who you want, when you want, how you want – regardless of the communications device and the network available at the time – using either a mobile, desktop or conference phone, or PC, desktop or conference room video system, ISDN or IP.”

The key enabler has been the move to IP, allowing users to piggy-back VC calls onto their data networks instead of paying dial-up telephone charges for every external conference.

“The move from using dedicated ISDN lines to flexible IP networks has allowed a more cost-effective service that is often more reliable and better quality,” said Steve Frost, business development manager for IP video communications at Cisco.

VC is converging with other technologies, promising a better user experience. Cisco call it “rich media conferencing”, Polycom call it “unified collaborative communications”, but it amounts to the same thing. “Instead of silos of video, audio and web conferencing, we increasingly have a collective market combining audio, video and web, via IP communications, into an easy-to-use collaborative experience,” said Frost.

According to the vendors, by sharing high-quality sound, video and data in real-time, users can achieve the nearest equivalent to a face-to-face meeting. The integrated approach is a key component of communication solutions from heavyweight network vendors, who are lining up to sign agreements with VC vendors such as Polycom, Tandberg and Sony.

Heyworth said: “We are integrating with instant messaging and presence applications, such as Microsoft Office Communicator and Microsoft Live Communication Server, team-work collaboration applications, such as Alcatel’s My Teamwork, and seamless IP telephony (IPT) integration with Cisco, Nortel and Avaya’s softphone and voice over IP solutions.”

Microsoft’s developments in web conferencing, especially Live Meet-ing, are being followed with interest by VC vendors.

“The Microsoft conferencing strategy is still largely an unknown quantity in the business-to-business space,” said Helen Sheldrake, UK channel manager at Sony, the number three VC vendor. “But the millions of people who are already conferencing using MSN as consumer to consumer will soon want to interact with other groups including businesses. Consumer to business will undoubtedly help grow the market as a whole.”

QoS will be a critical issue for users of VC over IP, who may have to up their network bandwidth and enforce QoS agreements with their WAN and IP carriers. However, improved compression standards, such as H.264, are enabling VC to operate over bandwidths as low as 256kb. This means that less formal VC calls can be conducted over a broadband link.

“With the constant expansion of bandwidth being deployed by the major ISPs, we are seeing increased sales of our desktop videophones,” said Paul MacKenzie, UK sales manager at Aethra, the number four VC vendor.

Several vendors report increased interest in all-in-one desktop VC units or VC software for PCs equipped with a webcam, and portable VC systems are starting to appear.

Polycom’s desktop VC software costs £79 for a single user, down to as little as £26 per user for volume licences. “A software VC application plus a good quality webcam costs £150 – less than the train fare from London to Manchester,” said Heyworth.

Portable systems cost around £1,200, while a conference room system can be had for £7,500 including installation.

At these prices, VC is no longer the sole preserve of multinational companies anxious to cut their intercontinental travel bills.

“A lot of people promised that VC would be ‘the next big thing’ about five years ago, but it was only a big thing for big companies,” said Rakesh Mahajan, general manager for marketing and strategy at BT Indirect Channels. “To achieve the quality needed for basic VC, users needed to aggregate the bandwidth of four ISDN lines, and for SMEs this just was far too expensive.”

IP, broadband and the advent of cheaper desktop and small-room systems have changed all this, and vendors are starting to report significant growth in sales to SMEs.

“VC is no longer just for the corporate market, although this area is still very important,” said Sheldrake. “Green travel is becoming part of many companies’ environmental plans, and ‘soft’ benefits, such as employee stress levels and satisfaction, are also becoming a major consideration. Travel for meetings is increasingly stressful and unnecessary.”

Many sectors are already big users of VC, including education and training (for distance learning), healthcare (for remote consultations), manufacturing, pharmaceuticals and biotech (for remote product development), and finance, retail, legal and the emergency services.

Modern business practice seems almost tailor-made for selling VC solutions. The increase in flexible working, home-working, virtual teams and offshore outsourcing all mean that colleagues are less likely to work in the same location. Heyworth quoted a Harvard Business Review survey of best practices among teams, which found that fewer than four per cent of people reported ever meeting all their fellow team members face to face.

Some of the benefits of VC are universal, said James Shore, UK and Ireland regional director at the number two VC vendor Tandberg. “You can have more frequent contact with colleagues, partners, suppliers and customers without leaving the office. It allows for ad hoc meetings, letting you discuss urgent matters and take immediate decisions. It saves time, resources and money, and improves the effectiveness of your working day and your quality of life,” he said.

The return on investment can be startling. “Chubb Insurance paid for all its video systems in less than six months through reduced travel and entertainment costs,” said Heyworth. “One system paid for itself in a day when, instead of travelling to Manchester for a meeting, employees remained in London and held the meeting by video.

“Lex Vehicle Leasing used VC to save 9,051 hours of productive time when employees were available at their desks rather than on the road. It also saved over 450,000 miles of travel and over 14,000 litres of petrol.”

Many potential buyers have yet to be convinced however, so resellers may have to do some pretty active selling. “Many companies have only experienced ISDN-based VC or traditional IP VC without QoS, and so they don’t understand or believe that broadcast quality VC is available today,” said Tony Hurtado, vice-president of global marketing at network and VC services provider Masergy. “Resellers can address these concerns by experiencing and demonstrating these capabilities.”

Cautious customers can be introduced by easy stages, said Heyworth. “Resellers can help customers take their first steps in the conferencing and collaboration space with audio conferencing. As they benefit from improved communication, the reseller can move them further up the ‘collaboration curve’ and show the benefits of deploying voice plus content (data sharing) solutions, and finally deploy VC plus voice plus content solutions. So revenue is available from up-selling.”

VC used to be a highly specialised sale, and it still helps to have certain types of experience. “We see three main categories of reseller,” said MacKenzie. “There are carriers [such as BT]; audiovisual resellers, who currently enjoy most of the benefits of selling VC; and internet working resellers, who have an interesting opportunity. IT and audiovisual know-how help in this market.”

Now, however, the specialised element is beginning to disappear. “It is still a specialist sale if the reseller wants to add value and integrate products with services,” said MacKenzie. “But if it is just a videophone for home use you could sell out of the box.”

Ian Vickerage, managing director of digital video distributor Imago, said: “Rather than being a specialist sale, VC products can be sold by any reseller that equips itself with good training and demo facilities and good support and backup. This is, more than ever, a lucrative market for UK resellers, and if they are certified the margins are even higher. We are actively looking for IT and network resellers who can add value and are keen to bring VC into their line-up.”

IP skills will be vital, according to Cisco’s Frost. “As VC matures into a larger collaboration market, skills in IPT and IP networking will be key to a reseller’s success. Traditional VC resellers are skilling up on IP, and the current IPT and IP networking channels are gaining expertise. The coming years will see continued skills cross fertilisation, partnerships and consolidation in these channels,” he said.

Many observers agree that adding value is crucial to maintaining good margins. “Resellers need to provide services: maintenance, installation, bridging, monitoring, training, scheduling or integration,” said Hurtado. “The best opportunities are in SMEs, that don’t have dedicated IT people and need consultative sales, and convergence, because even large corporations don’t have staff skilled in advanced network services.”

Sales opportunities are not restricted to VC systems. “Infrastructure requirements are increasing as the adoption of the technology grows, and more users will require more endpoints and gateways,” said Shore.

The VC industry is highly confident about the future. “Sony expects the EMEA VC market to show double-digit growth over the next four years, anticipates a 20 per cent year-on-year increase in endpoint sales in 2005, and expects growing demand in the SME markets as VC systems become an integral part of the desktop environment,” said Sheldrake.

“The move towards desktop conferencing and collaboration is growing fast,” said Heyworth. “IP networks are enabling increased reliability and quality that will lead to greater levels of adoption. The move into the home office will be significant. The adoption of video in mobile telephony, and its increased use in social communication will drive the expectation that video is a common, necessary and expected part of any communication session.”

Or, as MacKenzie puts it: “VC will become part of our lives.”