How video conferencing can open new markets

Mining consultancy Inpex wanted visual communications for its geographically dispersed teams so they could plan and design a project to extract gas offshore in Western Australia.

Effective and frequent communication was essential for this project, with lengthy meetings between the Australian offices in Darwin and Perth, London, and the Japan offices in Yokohama and Tokyo.

Traditionally this involved significant travel for busy executives, which resulted in a lot of down time and deferred decision making.

The consultancy selected Polycom’s HDX 7000 room telepresence product for its ease of use and open-source, open-standards based platform, says Jason Brotherson, Inpex’s infrastructure and telecommunications principal.

The solution was used to create a life-like meeting experience to help the geographically dispersed teams collaborate as if everyone was in the same room. Inpex’s highly complex gas project needed many strategic and highly detailed planning meetings between international offices, and the system is often used up to six hours a day and is a regular part of day- to-day business. Because it is easy and quick to use, people are using the telepresence system constantly and are making decisions faster, Brotherson says.

Polycom’s reputation as an advocate of open standards “made it the obvious choice for our requirements”.

“The solutions are easy to use, reliable and effective, which is why we have been able to achieve such high return on investment,” Brotherson says.

In the office, in the home

The potential of videoconferencing has always been enormous, as shown by the popularity of consumer products such as Skype which had more than 660 million users in 2010.

The complexity and cost of videoconferencing are dropping, and at every lower price point there is a new market waiting. The more active video conferencing units in use, the greater the number of people with whom you can make a video call.

Businesses will be more likely to take up video conferencing if they can connect to their customers with a business-grade service. Cisco hopes to establish itself as a major player in home video conferencing and took a step towards this goal by slashing the price of its home telepresence service, Umi.

The Umi line offers HD recording and sharing on FaceBook, Flipshare and YouTube with a set-top console, motorised camera and remote control. The range consists of two resolution products, the Umi 1080 and 720.

Launched last October in the US for US$599 with a US$24.99 monthly fee for unlimited video calls, video messaging and video storage, Cisco has dropped the maintenance fee to US$9.95 a month, or US$99 a year. There is no service fee for the Umi Connect softphone for PC and Mac.

(Cisco is selling Umi in North America and trialling it in Europe, Asia and Latin America, but has no plans to release it Australia yet.)

Reaching out to home users of videoconferencing creates opportunities for businesses offering consumer-based videoconferencing services, such as distance learning, remote diagnosis, professional and community services.

Building a business case for the technology in the business-to-business market has taken longer. Call quality, reliability, integration with line-of-business applications, ease of use and proprietary standards have taken time to sort out. And it’s simply been too expensive for SMBs to consider.

With Cisco and other vendors dropping the price on hardware, the barriers to entry are lowering to let many more potential customers in the gate.

“Video is the new voice,” says Peter Hughes, manager of communications and collaboration for Cisco in Australia and New Zealand. “Every end- point, every phone, PC, mobile phone or tablet is going to be video enabled.”

Business videoconferencing will grow tenfold from 2009 to 2014, according to Cisco’s networking solutions whitepaper. Web-based videoconferencing will grow 180-fold over that time.

Business videoconferencing traffic is growing almost three times as fast as overall business internet traffic; 

and more than half of business videoconferencing traffic will travel over the internet by 2014.

“The market share in Australia was around 53 million in 2009,” says Hughes. “There has been 30 percent growth in the last couple of years. For us, it’s a $100 million (business) in the next financial year.”

Videoconferencing is not only about saving on travel costs, but about saving time and having access to expertise. “Businesses can have 10 people in a meeting rather than just sending two people travelling. Travel for a one-day meeting will take three days. My time out of action for three days is more expensive than a travel ticket to Singapore for a meeting.”

The SMB market is an untapped market for videoconferencing, says Simon Claringbold, Asia Pacific vice president at LifeSize Communications.

With their frugal technology budgets, vendors such as LifeSize have been working on making videoconferencing solutions more affordable.

“They want a solution that is easy to deploy and maintain, and has a quick return on their investment,” Claringbold says.

LifeSize won the job with interpreting and translating services company Oncall because of the high quality of its audio and video, value for money, and products that are easy to use and install, Claringbold claims.

Oncall installed LifeSize Express and LifeSize Networker units in both the Sydney and Melbourne offices, using the services of LifeSize’s partner, Black Box Network Services.

The LifeSize system cost about $30,000, which was $10,000 less than other solutions, LifeSize claims. Savings in reduced travel costs for 150 staff paid for the system within a year.

Claringbold says videoconferencing units that are marooned in dedicated rooms are often ignored as people would rather use their phones.

One option is to use portable units that can be moved to where they are needed. “Resellers are attracted to our solution because of the easy deployment. And most importantly, it does not use a lot of bandwidth.”

Travel fades as chief driver

Stories of saving money by reducing travel are common justifications for videoconferencing. Cisco TelePresence was used for global architectural and design firm Woods Bagot to collaborate on projects based on expertise, not location. All its clients needed 

is a video camera. In one year it saved $440,000 in travel costs alone, and now considers itself to be a more environmentally sustainable company.

However, an important part of the technology’s growth is that business usage cases of video conferencing are diversifying beyond travel.

Education is big, says Cisco’s Hughes. “Education uses videoconferencing for access to expertise around the world, where students can get the face to face (experience) without travelling.

1. Upgrade software. For instance, LifeSize Video Center just announced the new software upgrade to VC1.2 which means customers can do e-learning modules or read broadcast messages on the road via their mobile device (iPhone, iPad etc).
2. Upgrade to standards-based, high-definition video. This means any investment today can leverage future solutions and doesn’t need to be replaced.
3. Upgrade the network. Companies that take on high definition videoconferencing often require network upgrades as well. This creates the potential to earn more services work for resellers. Upgrade ISDN networks to IP (90 percent of all deployments are IP now), and where there is IP, upgrade bandwidth to support calls as necessary.
4. Install a video bridge. This means organisations use the bandwidth they need to make any type of call rather than having a fixed allocation for each type. They can upgrade the infrastructure and video endpoints and still use existing systems.
5. Connect to applications. Integrating video conferencing into your applications lets you do things like initiate a call from a chat session and turn it into a video call on your video- deskphone.
6. Managed or hosted services. These can reduce spending on equipment while outsourcing technical responsibility and upkeep.

“It’s used in corporate communications. A CEO can use a videoconferencing system and record a two- minute corporate speech that can be streamed out live on the internet or archived. Corporate events use it for experts live on stage for a two-way conversation with conference audience. The health industry has access to a remote doctor over the video,” Hughes says.

It’s important that a videoconferencing system is easy to use. “The recent drama and tragedy in New Zealand showed how easy it is to use our system. Emergency groups used a camera in their PC to quickly establish videoconferencing,” Hughes says.

Content is king for small to medium organisations, says Tom Morgan, chief executive officer of unified communications reseller eVideo Communications.

For example: “Fitness First personal trainers use video to make a personalised one-hour video. I could be overseas and could dial in – put in my pin number in and view a video made just for me.”

Videoconferencing is going away from point to point. “It’s now more video streaming. It’s a content-based product, so you can archive the video call,” he says.

“It’s ideal for education, training and public announcements. Managers can make an announcement, or let staff know what’s happening. They can record a message and put it on the website. It can be a public or private (distribution/viewing),” Morgan says.

Recruitment is another industry where there is interest. “Recruitment is expensive. Candidates can come in for two, three interviews. A candidate may be in Perth, and recruiters in Sydney can see a photo and talk on the phone, but that’s not good enough – they can’t see the body language,” Morgan says.

eVideo Communications also offers its clients tips on branding, such as using logos in the background, how to light the space, and how to speak for a videoconference call.

In the past, videoconferencing was mainly about saving travel costs, agrees Michael Chetner, Polycom country manager in Australia and New Zealand. “It’s now about being more productive, doing better than the competition, and bringing a product to market in less time. The whole supply customer relationship communication will grow.”

Chetner says the mining and manufacturing industries are areas of growth for videoconferencing sales. The technology is useful for managing international operations in remote, difficult to reach or dangerous locations.

“The manufacturing industry needs to be much smarter in bringing products to market,” Chetner says. “Most suppliers are based in Asia. Sourcing material from Asia using videoconferencing means there is no timeline to send product for people to inspect – they can share it on high definition video, which cuts time to market.”

The mining and manufacturing industries want to speak to suppliers and customers in the Asia Pacific region, especially India, China and Japan, he says.

One manufacturing customer, Exego, a reseller and supplier of automotive parts and accessories, uses Polycom HDX 8000 units, Polycom HDX 4000 personal telepresence units and Polycom soft clients for employees ranging from directors to front-line staff. Videoconferencing is used for executive meetings to training sessions, product demonstrations and customer interviews, and the system has expanded from five users to over 300 today.

Remote diagnosis over video is another important application. “A doctor taking a case can have a conference call with a specialist. Before, a patient could drive six hours to a hospital and wait another four to see someone. Videoconferencing prevents a lot of unnecessary mucking around,” says Ashlee Ball, sales manager at Fast Track Communications.

However, the lack of a Medicare rebate for a video consultation – in the past a consultation had to be face to face before a refund was paid – stopped organisations in the health industry from buying videoconferencing solutions, Chetner says.

The future is mobile

A future growth area for video and SMBs is consumer devices such as iPads, Chetner says. “There will be a demand for organisations to have apps on them, video or otherwise. Video apps on the iPad will extend the ability to have videoconferencing wirelessly, not just in boardrooms.”

Apple’s Facetime and Skype are good examples of applications that have driven video calls, but Chetner is critical that these platforms only allow calls between each other. “Only once these platforms are opened up to allow calling from anyone to anyone will the power of video calling on devices across all platforms be harnessed, whether that is Android, iOS, Skype, etc.”

Polycom’s strategy is to deliver high definition telepresence and content sharing across a range of mobile device platforms, including Android, BlackBerry, Microsoft Windows 7, and Apple devices.

“This technology will include integrated feature-rich mobile clients, standards-based architecture, and the Polycom UC Intelligent Core (allowing the ability for multi-point calls).

“This fits perfectly in service provider networks to enable cloud-based (communications) delivery to consumers and enterprises.”

Polycom’s first foray into the world of mobile apps was with Samsung. The Polycom application Telepresence m500 is based on the Android platform and is available. “It uses the tablet hardware to control voice and video quality. Users will also be able to video call between Android devices, such as two Galaxy Tab tablets, and between different devices, such as a tablet and a phone.”

LifeSize Communications has also just developed HD video content streaming on mobile devices, such as iPhones or iPads, using LifeSize Video Centre. Videoconferencing can also be used over the just- released iPad 2, which comes with two cameras.

The expansion of video conferencing from dedicated systems to devices of all brands, shapes and sizes is another important driver in its growth.

Cisco’s cross platform application, Jabber, incorporates Cisco’s presence technology, instant messaging, desktop sharing, conferencing, video messaging and voice. Jabber links into Cisco’s own unified IP devices, WebEx MeetingCentre and TelePresence.

Cisco, as does Polycom, believes customers don’t want to be restricted in the devices they can use for video (and voice), regardless of whether they are using Macs, PCs or mobile devices.

Jabber is already available or in development for Windows, Nokia, Android and BlackBerry handsets and iOS devices, and will launch on Macs in the second quarter of this year.

The potential for managed video

Joe Sweeney, IBRS analyst, nominates education, government, and construction as being high users.

However, a lot of IT departments are struggling to meet increased use of video communications technology. “Video communications running on internal networks (reduces) performance if much of the network is given over to video.

“The next big growth area may be fully managed and customised video communications, (where an outside organisation) runs the network and video communications.

“There are major costs in buying and running a network, but if video is used on an iPad device, communications are not going over the company’s network,” Sweeney says.

If the National Broadband Network (NBN) is successful, then there could be a huge explosion of customised video communications in rural areas, Sweeney says. However, some remote areas may be using satellite.

IT research company Gartner expects the videoconferencing market to see strong double-digit growth during the next five years.

Last year, a Gartner worldwide survey of organisations that used videoconferencing showed that opportunities for managed services will grow, particularly where the service provider is willing to minimise the capital investment by hosting solutions in the cloud or as a managed onsite service.

Vendors are likely to gain more from upselling 

(see break out). “The financial industry is a big (videoconferencing) user, but not significantly higher than the average number of users,” says Gartner analyst Bjarne Munch.

“Among the top users are IT and research and development departments, where there is a need for collaboration to increase productivity.

“We are beginning to see a lot more use in marketing activities, (such as) talking to business partners, suppliers and resellers. I get invitations myself from vendors to do video conference presentations.”

There is a strong trend away from using videoconferencing in a conference room to the end user. “Executives prefer a videoconferencing unit sitting on their desk. It’s more personal. It could be a stand alone unit on the desk, or integrated with a laptop,” Munch says.

There is strong growth on using videoconferencing on laptops or desktop so people don’t have to leave their desks, Munch says.

Happy staff make a stable business

As the list of reasons for buying videoconferencing continues to grow, taking the pressure off travel- weary staff could be an unexplored area. Business efficiency, faster decision-making and savings in plane fares and hotel accommodation are always great things to talk about.

But by focusing on employee satisfaction a company could also save money in reducing the rate of turnover.

Fast Track's Ball says she helped one employee cut down travel from weekly to quarterly as he demonstrated casings for optic fibre around Australia.

“It saved his marriage,” Ball says.

Videoconferencing plays an important role in helping to retain staff by giving them more flexible working hours and the ability to work from home, says Shervin Fathinia, chief technology officer at iVision.

“Executives can take part in video conferences and talk to international staff from their homes using mobile videoconferencing on laptops. This gives them a better work/life balance.

“The day may still be extremely long, but at least the late night or early morning communications can be done from home,” Fathinia says.

Ten tips to sell videoconferencing

1. It’s a mistake to try to sell a technology solution. The business use determines the need, and that determines the product. Understand the business needs then align the technology with that.

2. Educate the organisation you’re selling to. It is critical to be able to explain all the potential ways a business can use videoconferencing.

3. The most effective approach is to see a demo of the experience. Only after that can people truly understand what it’s about.

4. Target the chief executive officer. The best way to get everyone using videoconferencing is when the CEO uses it in a meeting.

5. Target busy people.

6. Make sure everybody works on open standards, which means any different videoconferencing equipment of customers and suppliers will work together. Make sure any videoconferencing system works with, say, an IBM or Microsoft solution. Make

sure it’s not a standalone solution and can work with another vendor’s product.

7. The network is critical. Make sure there is adequate bandwidth.

8. Try lowering the total cost of ownership through rental or hosted programs. (Systems now start from as little as $25 per week.)

9. Lower the total operating costs through using less bandwidth. For example, Lifesize and LG can operate on ADSL2+.

10. Appeal to SMBs by lowering the barriers to entry. For instance, promote a broader range of solutions with lower upfront costs and include a mobility solution that can work with 3G.