It’s been more than two decades since videoconferencing vendors began promising to revolutionize the way the world does business. The revolution still has yet to arrive, but when—or if—it finally does, at least we’ll be able to watch it together in really high-quality video.
In his 1996 novel, Infinite Jest, David Foster Wallace deconstructs all that’s flawed with video communication: the awestruck callers, giddy at the advent of a new technology, thrilled simply to gawk at each other—only to devolve into missed connections, and, in the end, a total lack of meaningful communication.
In many ways, it’s a perfect metaphor for the videoconferencing industry.
Virtually every Fortune 500 company has deployed some form of the technology, to varying degrees of failure (and, yes, the occasional success). But what was once a bug-ridden, $100,000 system can now be had essentially glitch-free for $5,000 or $10,000. Put another way: There are a lot of companies sitting on costly, outdated equipment that they were never fully able to capitalize on. Oil and gas company Kerr-McGee, for example, spent years hamstrung by units that “were more of a pain than they were helpful, because the equipment that we were using was very, very finicky,” telecom associate Stephen Patton says. “We were getting only about a 50% connectivity rate.” Unlike many companies, Kerr-McGee decided to abandon an entire deployment—but insisted on going high-end (and high-price) with its replacement. “You get what you pay for,” Patton says.
Today, “what you pay for” comes down to two major issues: First, what kind of system—appliance (group unit) or PC-based (personal or desktop unit); second, what kind of pipes to communicate through—phone lines using Integrated Services Digital Network (ISDN) or Internet Protocol (IP) network technology.
Both issues are critical. “Questions about ISDN and IP are significant—and not a trivial portion of the cost,” says Thomas Kipp, vice president of information systems at retail-technology developer Retek. And there are arguments to be made for either side. With ISDN, there are usage charges (60 to 90 cents per minute, according to estimates by Wainhouse Research) on top of monthly fees ($130 to $160); with IP, the fixed costs ($500 to $1,500 per month) are higher, but usage is unlimited. Still, some companies value the guaranteed connectivity of a dedicated ISDN line over the possible network traffic IP might run into.
Three manufacturers control nearly 90% of the group-videoconferencing market. Polycom, by far the leader, expanded from audio- to videoconferencing with the purchases of ViaVideo, and, a few years later, Accord and PictureTel. Tandberg, meanwhile, was capitalizing on its equipment’s reputation as the best-engineered in the industry to cut Polycom’s lead by more than two-thirds.
Polycom’s retail strategies are also partly to blame for the slip. Several resellers, who spoke on condition of anonymity, note the firm had been stuffing its distribution channels for several quarters, and resellers were bearing the brunt of the ill effects. (Also not working in Polycom’s favor: for resellers that offer both Tandberg and Polycom, the potential profit margin on a Tandberg sale is often significantly higher.)
Videoconferencers often point to reduced travel expenses as a cost justification. External travel restrictions due to recent events—Iraq, SARS—have intensified companies’ search for alternatives to travel. (Patton says SARS is one reason Kerr-McGee will soon be installing another unit in its Singapore offices.) But, as Jennifer Andrade, a marketing specialist for the state of Wyoming, notes, sometimes videoconferencing’s about more than money: “In the winter, you don’t ever want to travel in Wyoming.”
No savings or efficiencies matter if people can’t use the technology painlessly. Ease-of-use is the factor most often cited by companies—especially in its absence. A Tandberg sales engineer once posted on a Web forum that “we believe it is constructive to admit that no user interface is intuitive for an end-user.”
In many cases, video still requires a push from the top. “When our old CEO came on, he asked, ‘Where’s the videoconferencing room?’ We didn’t have any,” says Owens-Corning project manager Matt Heath. “A month later, we had five.”
But videoconferencing-by-fiat isn’t enough. “If there was no upside,” says George Fortney, a senior engineer at Sarnoff Corp., “then all we’d have is an expensive toy that would eventually collect dust and a monthly ISDN bill.”
Some of the traditional dividing lines are beginning to blur. Tandberg, for example, just announced a development deal with Webconferencing mainstay WebEx, allowing callers to add a WebEx conference to Tandberg’s data screen. First Virtual has begun marketing a Web- and videoconferencing hybrid that allows for a PC-based viewing experience. Last year, Meta Group predicted “widespread corporate use of IM-based videoconferencing will emerge in 2006.”
To keep pace, Meta Group analyst Chris Kozup says, “there needs to be more convergence of staffing within the enterprise—cross-training around voice and data and video.” Frost & Sullivan analyst Roopam Jain thinks it will be “two to three years before you see actual customer adoption. Infrastructure is not ready for that in a broader sense, but it should take place hand in hand with the development of IP networks.”
Ironically, those combinations may be what finally brings videoconferencing to the fore. As reseller David Brenner says, “Traditional vendors can’t pull off the transition to desktop, so our best hope is other applications, like Webconferencing, dragging desktop video into the mainstream.” Heath certainly hopes it’ll happen. “If you could just stay at your desk and press a button and start a video call, it’d seem more like a regular phone call.” And phone calls, it’s safe to say, are sticking around a while longer.
