The iPower 680 (at left) is one of many conferencing options offered by Polycom. Bud Parer, whose company uses the system, says it works best for meetings that need to produce decisions, where attendees can look one another in the face.
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Parker Hannifin, a Fortune 500 manufacturer of motion and control systems, has used videoconferencing systems for about six years. But it wasn’t until last year that the company really began using the technology aggressively.
The primary motivating factor, explains Bud Parer, information systems manager of the compu-motor division, was a corporate mandate to integrate the resources of two company divisions in just three months time. Since one of the divisions was in Ohio and the other in California, the company turned to videoconferencing — and Polycom’s iPower 680 system in particular — as the tool that would allow them to accomplish the task.
Parer says that integrating these two divisions meant integrating the systems of many departments, including accounting, order entry, and human relations. The only way to do that, he says, was to hold a lot of meetings. Given the distance between the two locations, it just wasn’t practical to use airplanes to ferry people back and forth.
With videoconferencing, Parer says, people were able to have “numerous daily discussions, and sometimes they would go on for four hours or more, doing all kinds of things from the very simple to the fairly strategic.”
Not only was the company able to save money by cutting out dozens of plane trips, but videoconferencing proved critical to the success of the project. “We got things done that we wouldn’t have gotten done had we got on airplanes,” Parer says.
In addition to becoming an aggressive videoconferencing user, Parker Hannifin has also recently adopted webconferencing. Its system of choice is Placeware. Unlike videoconferencing, which provides interactive, two-way video between two groups of people sitting in two remote, Polycom-equipped conference rooms, the Placeware system lets any number of people sitting at their desktop computers simultaneously view a presentation, complete with graphics, slides, and text. A teleconferencing hook-up provides the audio link.
Parer says the Placeware system is the perfect tool when someone wants to give an informational presentation to a group of people. The Polycom system, on the other hand, is better for conducting meetings that need to produce decisions.
“I truly believe that decisions are made when you can look someone in the face,” says Parer. “If a decision has to be made, I think the Polycom system is the better of the two.”
Webconferencing vs. videoconferencing
Besides the need to integrate two divisions within a tight timeframe, Parer says there were two other key factors that motivated the company to adopt these virtual meeting technologies this past year — the tough economy and the recent improvements in the technology. In that respect, developments at Parker Hannifin accurately reflect what’s happening in the corporate world at large.
Industry analysts say the use of conferencing technologies is on the rise, and the poor economy and improvements in the quality of conferencing technologies are big reasons why.
According to Wainhouse Research, an industry market research firm, the overall conferencing market will grow 22% from $3.6 billion to $9.8 billion by 2006. The research group says that webconferencing is poised to be the fastest growing segment of the market, and is expected to grow 47%. The videoconferencing segment, in contrast, is predicted to grow about 20% — not as impressive a rate as the webconferencing market, but still better than the 1% to 2% growth videoconferencing has sustained in recent years.
While market size estimates from industry research firms vary because of differences in how they define the markets, the one thing almost all agree on is that the webconferencing market segment will enjoy the strongest growth. One of the most aggressive estimates comes from David Alexander, an industry analyst with Frost & Sullivan. He expects to see the webconferencing market grow by more than 170% in the next two years.
“This is the year that webconferencing has really taken off,” Alexander says. “Today, virtually every enterprise has been on a webconference, or at least knows what a webconference is.”
One of the reasons the webconferencing market promises to grow so much faster is that it’s growing from a much smaller base. While videoconferencing is a fairly mature $1.5 billion market, webconferencing is a nascent $288 million market, according to Wainhouse figures.
E-StudioLive CommuniCast's primary function is to provide a one-way broadcast of video, graphics, and slides over the Internet or another IP network. The product is more of a webcasting product than a videoconferencing product, and thus is suited to applications such as distance learning and sales training.
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Beyond that, however, is the fact that webconferencing offers several important advantages over videoconferencing. For one thing, webconferencing is primarily a medium for sharing data, as opposed to two-way, interactive video. As a result, webconferencing is less weighed down by concerns over latency that have traditionally plagued videoconferencing. Even though analysts and users such as Parer point out that the video quality of today’s videoconferencing systems is much improved, the stigma remains.
In addition, unlike webconferencing, videoconferencing is a bandwidth-intensive technology that is more expensive and time-consuming to set up because of the infrastructure requirements involved. In contrast, webconferencing systems typically run over existing network infrastructure.
As Parer says, “To implement a videoconferencing system takes more than just buy-off from the purchasing people. There is a certain amount of setup time that requires a willingness to invest labor from whoever’s managing the systems. And that’s at both ends of the communications channel. And you’ve got to find it acceptable to either pay ISDN prices or dedicate some of your T1 pipe. So it takes time. It’s not like buying a word processing package.”
And finally, there’s the fact that webconferencing can be accessed from any desktop computer. You don’t need to need to retreat to a specially equipped conference room for a webconference.
“I think both videoconferencing and webconferencing are going to grow,” says Andrew Davis, a managing partner at Wainhouse. “The savvy users will look at conferencing as a suite of tools and will use the right tool for the right project. However, the bottom line is that webconferencing holds a lot more promise because all you need is a PC, a web browser, a dial-up connection, and a telephone for handling voice. You don’t need any special equipment. You can be anywhere. Because of that, I think its potential is far greater than videoconferencing, which will always need a decent piece of equipment and a decent network connection.”
Growth patterns
While the tide in the webconferencing market appears to be rising rapidly, it’s not yet raising all boats at the same rate. For example, one company that is still waiting for its moment is E-StudioLive.
E-StudioLive’s system is actually more properly defined as a webcasting product than a webconferencing product, since its primary function is to provide a one-way broadcast of video, graphics, and slides over the Web or other IP network. It’s a one-to-many product that affords low interactivity, but offers a great deal of user control that allows a presenter to alter a webcast presentation on the fly. Among the applications for which the product is suited are distance learning, sales training, marketing presentations, and internal corporate communication.
While Art Souza, E-StudioLive’s vice president of marketing, says the company has seen an increased interest in webcasting in the last six months, sales are still slow in coming. Souza says the majority of the company’s business comes from its line of EchoLab video switchers, but he’s convinced that in the long term, the value of the company will be in webcasting.
“All these markets go through different types of transitions,” Souza says. “We look at the model of desktop publishing a lot, and we think that is kind of similar to where webcasting is. Today, webcasting is really a services business. The lion’s share of the revenue in webcasting is going to vendors like Yahoo! Broadcast because the technology is complex. People don’t know how to use it, it’s hard to build a webcast, so it’s just easier to spend a lot of money and go to a service provider.
WebEx's webconferencing services focus more on data and interactivity than simple video. The company offers two-way video and runs conferences over its own network, allowing users to interact in realtime.
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“But we are one of the few companies out there that sells a product, and we think that over time, as the technology gets easy to use and gets inexpensive to use, the service providers go away and it becomes a pure product business. It’s similar to what happened in desktop publishing where it moved from being a completely outsourced service to today, where my 11-year-old child has desktop publishing. And we think that at some point webcasting is going to be so simple to use that anyone who wants to webcast can webcast from their desktop,” he says.
But if E-StudioLive is still looking hopefully to the future, companies like WebEx have been on a rocket ride for the last year or more. According to Praful Shah, WebEx’s vice president of strategic marketing, the company’s revenues grew from $25 million in 2000 to $81 million in 2001. Revenue for 2002 is expected to top $140 million.
Like Placeware and Raindance, two other companies that have enjoyed solid growth, WebEx is a services company that sets up webconferencing meetings that are interactive affairs -- complete with slides, graphics, and text. In addition, WebEx offers two-way video. What sets WebEx apart, explains Shah, is that while the other two companies offer database-centric solutions, WebEx offers a network-centric solution.
Shah says WebEx is the only company that has built a global network over which it runs its communications. While other webconferencing companies post meeting data (slides, graphics, etc.) to remote databases, WebEx meetings are run over the company’s own network. The result is an ability to run highly interactive meetings in realtime, complete with a two-way video connection. Revenues are generated in much the same way as those of a phone company, either through a per-minute usage fee or a monthly flat fee.
Indeed, Shah likens the WebEx solution to a telephone, explaining that it provides the ease-of-use of a phone but with a full range of multimedia communication tools — voice, graphics, text, and video.
“What makes the phone a multibillion dollar business,” says Shah, “is not that two telephone devices can be connected over copper wire. Rather it’s that somebody innovated the concept of voice switches that could be networked together in a sophisticated communication service that requires the end-user to do nothing but pick up a phone, punch in a number, and talk.
“So we came up with the concept of building information switches that are like telephone switches but are for IP and multimedia services,” he says. “We built the switches ourselves. This is our core competency. And then we deployed a global network around it so that the end-user can use a browser like a telephone to communicate with anybody, anyplace in a multimedia environment.”
Shah believes the biggest reason traditional videoconferencing has failed to take off is not because of latency issues with video, but because the tool was so difficult to use. In contrast, the reason WebEx’s business has grown so quickly, Shah says, is that the concept of an easy-to-use multimedia phone is as compelling as the telephone.
“Think of the phone and how useful that is,” he says. “Now imagine how useful it is if you add slides and graphics and video to it.
“The cost of the service is negligible compared to the benefit you get,” he adds. “Let’s say you’re in a department of 30 people, and you can save just one person from getting on a plane every month. That would pay for unlimited usage of WebEx services for that many ports for the whole month. So the financial benefits are very, very high.”
High-quality video
While the quality of WebEx’s video is nothing to write home about, it’s good enough to be functional, and that’s the important thing, Shah says. However, for VBrick Systems, another company that’s seen enormous growth in the past year, providing high-quality video over broadband networks is not only a point of pride, but a crucial requirement of its customers.
VBrick Systems makes a suite of low-cost, brick-sized encoders/decoders that makes it possible to pass TV-quality, and even DVD-quality video, over broadband networks to any number of computers, monitors, or television sets. Described as a Swiss Army knife type of tool for video networking, VBricks are not only useful for videoconferencing, but also for distance learning, surveillance, security, video management, video-on-demand, and many other applications. The company’s client list includes universities, corporations, the White House, national security agencies, departments of transportation, and investment houses.
As a one-to-many communication tool, VBrick is ideal for internal corporate communication applications that require a broadcasting approach. For example, says VBrick CEO Fred Geyer, “If a CEO wants to communicate to people in his company, he can set up a camera, hook it into one of our VBricks, and broadcast a live message to every desktop in his company.”
Impressively, such an application requires just one VBrick encoder. A Windows Media Player plug-in software program is all that’s needed to decode the video for playback on the desktops.
In addition, VBrick works equally well for two-way, interactive video communication applications, such as videoconferencing.
“Historically, people have used telephony for videoconferencing applications,” Geyer says, “but we use digital networks for that, so the experience we deliver is vastly richer than what most people think of as videoconferencing.”
Like WebEx’s Shah, Geyer agrees that traditional videoconferencing has failed to take off because it’s been so difficult to use and typically requires special cabling and hook-ups. Unlike Shah, however, Geyer believes that poor picture quality has held videoconferencing back.
“Most people’s video experience comes from watching television,” Geyer says. “They’ve come to expect that that’s what moving images coming out of boxes should look like. So I think most videoconferencing experiences that people have had haven’t been that satisfactory in comparison to that TV experience. We fundamentally believe that’s the major impediment keeping videoconferencing from ever getting to the big time.”
VBrick's products, such as this VBrick 6000, work well for distribution of internal corporate communications and other applications that call for a broadcasting approach. They also do a good job of delivering high-quality, two-way interative video.
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VBrick’s line of encoders and decoders appears to solve both those problems. Not only can they deliver two-way, DVD-quality video, but they work across the existing broadband networks that almost all companies already have in place.
“You’ve got to have a switched Ethernet, but almost everybody has that,” says Geyer. “So you don’t have to implement another video network, and thus create another network to support.”
It may well be that the VBrick products represent the most important breakthrough in videoconferencing technology in years. Interestingly, however, it’s not a market that VBrick is aggressively pursuing at the moment, even though it already has a fair number of customers using its products for that purpose.
Geyer says the reason is that the videoconferencing market is already being targeted by an array of large, well-known competitors, such as Polycom, Sony, and Tandberg. “It’s not usually a good business strategy to take on well-entrenched, major competitors,” he says.
Besides, he adds, the demand for VBricks from other, untapped markets is so large that it’s more than sufficient to keep the company busy. Departments of transportation are using VBricks as security devices for monitoring bridges, railroads, and highways; schools and universities are using VBricks for distance learning and virtual field trips; airports are using VBricks for security; and military and government organizations are using VBricks for a wide range of purposes. For example, the VBricks are used to deliver live or stored video feeds to hundreds of desktops in the White House, as well as to desktops at the National Security Agency and the White House Situation Room.
“Because we are a small company, we can’t focus on everything and be successful,” says Geyer. “So we focus on the things that are the new applications and are easier to go after. As more people experience what can be done, it is our belief that we set up the videoconferencing market by penetrating those other markets.”
The road ahead
All in all, the future for virtual meeting technologies has never looked brighter. The demand for webconferencing is already growing exponentially, and the videoconferencing market is poised to enjoy its biggest growth in years.
“The technology is getting so much better,” says Polycom user Bud Parer. “The quality is there now. And there are a lot more younger managers coming up through the ranks who are a lot more accepting of using this kind of technology.”
However, before videconferencing can really expand, says Andrew Davis of Wainhouse, there are still a few infrastructure issues that need to be addressed.
“I think to really see an explosion in the number of units shipped, we really have to start getting this stuff into people’s offices,” he says. “And that really takes sophisticated video network management tools so that you can have a central administrator managing 100 to 200 of these units. Fortunately, these things are starting to come to market. And, of course, you need IP networks that are robust and provide the quality of service that people demand.
“The infrastructure is coming, but infrastructure moves slowly,” he adds. “The good news is that we really think that 2003 will be a turnaround year in terms of the acceptance of IP, the availability of IP, and the robustness of IP. And that will give videoconferencing the infrastructure that’s needed.”
Geyer of VBrick expresses similar sentiments, but says the thing that will really set videoconferencing free will be broadband networks between companies, not just within companies. From his perspective, the Internet2 initiative may be just the thing that will make that happen.
“Most LANs handle video payloads with no problem at all, but the Internet itself today has all kinds of quality of service (QOS) problems. It works OK for email, but it’s not very good for these video payloads,” Geyer says. “But the Internet2 initiative, which is starting at the university and government level, is intentionally aimed at providing really good QOS and high bandwidth. And it is a multitask-capable network. As that gradually builds out and more people attach to that backbone, I believe that will prove to be a key enabler for delivering true, two-way, interactive television between any random two points on the globe.”
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