A View From The Road –
Special Report
A “milepost” perspective on industry activity and
what it
means for the future of video collaboration.
From Telepresence to the Desktop –
Video Comes Of Age
The video conference room is dead – long live video
conferencing
These
are exciting times for those of us in the video collaboration industry. Cisco, one of the largest firms in the high
tech world has agreed in principle to purchase Tandberg, one of the leaders in
the video conferencing industry. While
the deal is not completed and still has some hurdles
to overcome, on a scale of one to ten this is a solid fifty in terms of the
ramifications it presents to the future landscape of our industry.
In
order to understand the magnitude and nuances of this approaching upheaval one
first has to look back at the history of video conferencing and
telepresence. The IMCCA published a
comprehensive background on telepresence in the January
2008 edition of Europe’s World Commerce Review which provided an in-depth
perspective worthy of review. The state
of the industry at that time could be summed up as follows:
·
While
traditional video conferencing systems represented (and still represent) 99% of
the industry, Cisco’s entry into the top 1% of the market (telepresence) was a
defining and disruptive moment. None of
the other manufacturers or providers had the marketing budget and muscle of
Cisco.
·
The legacy
manufacturers adopted a “we have telepresence too” stance, very content to
increase the sales of their telepresence and
traditional video products to the rising tide of customers created by Cisco’s
marketing.
·
The very
compelling message of what telepresence provides had not been challenged. There was little incentive to market against
the telepresence concept – the idea that big, expensive, high-quality systems
“solved the legacy problems” of past, far less expensive solutions - regardless of the
inaccuracies that simplistic thinking created.
·
Telepresence
systems were being marketed and sold to senior management in the C-suite, with
many of the manufacturers bypassing the traditional video and multimedia
experts at customer firms in favor of the executives and IT leaders (who
usually weren’t video product experts and didn’t question the inaccurate
marketing message.)
So then
one might ask why Cisco would feel compelled to purchase Tandberg. The list of good business reasons is a mile
long and many are outside the scope of this article. What had become clear though, even before the
deal was announced, was that the telepresence marketing message was being
forced to change. Cisco themselves were
having an “Animal Farm” moment with their TelePresence product.
Their
go to market themes in late 2007 were:
In order to maximize ROI on a video
system the equipment needs to be installed in a specially designed, dedicated
room expressly for the purpose of video.
Utilization of that space would be able to achieve numbers in the 80% to
95% range, justifying the increased spending in equipment, bandwidth and
facilities. Life-size images are an
absolute requirement. Interoperability
with legacy video conference gear would ruin the TelePresence experience.
Their
new themes in mid 2009 - even before the Cisco-Tandberg deal was announced –
were as follows:
Target utilization levels beyond 50% to
60% percent result in end-user frustration due to an inability to reserve a
first choice room and/or time. There is
significant value in lesser priced systems being installed in multipurpose
rooms – allowing more people to have access to the video tools (and resulting
in even lower utilization). Life-size
images are really nice but can be somewhat sacrificed on one end of a call in
order to bring video to more users.
Interoperability with legacy video conference gear is an absolute
requirement.
The
message had changed significantly.
Everything the legacy video and multimedia professional had said about
the emerging telepresence space was shown to be true. This tremendous push into the upper 1% of the
market garnered the majority of attention but did not significantly change the
reality of video systems as they relate to Metcalfe’s law – one has to extend
the reach of the video systems to many users - more than the telepresence
paradigm allows for - in order for the technology to be widely adopted. While many manufacturers did call their
single screen systems telepresence whether or not it was true, the reality was
that as these screens continued to get smaller and reach wider deployment, “it
really wasn’t telepresence any more” (just as we said back in January
2008). For all practical purposes, the
term telepresence while having a clear definition in its purest state has
really just become a more politically correct method of saying video conferencing.
What will the industry look like going forward?
The
coming upheaval will have many effects on the current manufacturers, only some
of which can we even attempt to predict.
Cisco and Tandberg have put themselves on an interesting path. The combination has already attracted some creative
nicknames from our industry, beginning with the obvious “Cisberg”
and including my favorite, the Monty Python homage “Norwegian Blue.” There is tremendous speculation about how
this newly combined firm would operate.
The Cisco TelePresence related business units are a marketing driven
operation, very committed to image, message and executive perception. It is not news that engineering prowess and
product reliability were not the most important missions in the TelePresence
unit there. In contrast, the team at
Tandberg always had product engineering and reliability as mission one. On the equipment side one can surely expect a
merging / hybrid strategy for a brief period of time. However, in the long run, the better designed
products will win out. (If you need to
take a car ride, would you choose to take your Lexus or your Pinto?) One has to assume that the superior C60 and
C90 codecs from Tandberg will eventually be the engines for Cisco
TelePresence. More than just better,
these engines will allow Cisco to adopt a strategy that allows interoperability
from the telepresence room to the desktop and everywhere in between. Cisco will now be equipped with a broad range
of video products for every use case.
Just think of how the personal video appliances will explode when
promoted with Cisco’s marketing might.
In addition, it doesn’t take a psychic to realize that with a few tweaks
Tandberg’s industry leading management platform,
On
the operational side, it has already been announced that Tandberg CEO Fredrik Halvorsen will take over control of Cisco’s TelePresence
team upon completion of the deal.
Fredrik and his management team will likely represent a complete change
of direction for Cisco’s video group, moving it much further toward an open
philosophy that will listen to customers and respond with dialog and
solutions. (In fairness to the existing
Cisco team, there was only so much responsiveness they could provide while
locked into the
For the rest of the firms in the
industry, the picture isn’t as
clear. Much has been said about Polycom
in the wake of the announcement. They
are now clearly positioning themselves as the only choice for a Cisco independent,
open platform video solution. The latest
industry research showed them actually retaking the lead in global video system
sales by a small margin for the first time in years. Andy Miller (ex. Cisco, Tandberg and IPC) has
recently joined their executive team as the head of “global field operations”
with a clear mandate to help move them into a market leadership position. Polycom may wind up strengthening their
relationships with the independent, “Cisco-hating” firms of the world, or they
might be the next buy-out target of another large IT vendor, further
consolidating the industry. If that
happens one has to wonder how long the remaining independent video
manufacturers will be able to survive on their own. Video collaboration is changing from a product
industry to a solution industry – and to a lesser extent from a hardware to a software industry. Stand-alone hardware manufacturers are surely
on the endangered list.
Radvision
is in uniquely difficult circumstances.
Cisco has been utilizing their products – specifically the innovative
Two
clear categories of winners in the new video world will be managed service
providers and B2B connection / exchange providers. If you haven’t noticed everybody and their
grandmothers are getting into the services and connectivity businesses. There are two big reasons for this. Firstly, the paranoia of IT risk and security
teams has finally defeated any hopes of a simple, universal border control /
firewall traversal solution for IP video.
Regardless of the fact that there is an industry standard and highly
effective method of enabling secure external video for any enterprise (that
Tandberg helped in fact create) this standard has not been widely adopted. Tandberg was not an IT vendor, and as an
outsider they rarely gained the approvals required to place this technology at
an enterprise’s secured doorstep. The
other reason for the explosion of these businesses is simple – money. Many firms have discovered that selling these
B2B connection services (and to a lesser extent services to manage all a firm’s
endpoints) is a wildly lucrative business.
Customers will pay barrels full of cash to buy secure connections on
private exchanges and the related services (even though they could have
achieved them for free if they made their paranoid security groups back
down.) Look for a continued explosion
of offerings in this area.
What will video collaboration look like going forward?
When
the Cisco-Tandberg deal is completed and their expanded product catalog offers
much more than just rigid telepresence systems we will finally start to see a
correction in the over-hyping of telepresence.
At this point the video collaboration industry will have been forever
changed. The idea of a “video conference
room” – meaning a place you have to go to to engage in visual collaboration –
will go away, just as the phone booth did when you no longer needed to go
somewhere special just to participate in a voice call.
Three
paradigms for video will survive:
Desktop Video, Telepresence and the Video Equipped Meeting Room.
Corporate
executives have certainly embraced telepresence as an excellent system for
visual collaboration – in comparison to their legacy equipment. However, no executives are going to prefer
going to a shared room they have to wait in line to reserve when they can make
a telepresence quality call from a personal 24” screen on their desk. The Cisco-Tandberg deal clearly means that
desktop video is about to break-out in a huge manner, far displacing
telepresence as the industry darling.
Some reasons for this are:
·
The desktop
appliance is far less expensive than the telepresence room
·
It requires no
sunk costs – no “construction dependencies” to activate or utilize
·
It can be
installed, removed and relocated with no loss of investment
·
Widespread use
of them will require a heck of a lot more bandwidth and connectivity within the
enterprise (a reality that makes Cisco’s network infrastructure people happy
I’m sure)
·
It is personal –
requiring no reservation and always available - matching the long sought after
promise of “video dial tone”
At
the same time, other unified communications vendors are pushing the concept of
“free desktop video” through an enterprise’s PCs. Microsoft OCS as an example offers “click to
connect” escalation of IM sessions to voice and video calls – even HD quality
video calls with the right camera. Soon
a lot of people will be adopting the desktop video paradigm in a big way,
making the need to go somewhere to have a video call a thing of the past.
People
will still utilize truly immersive telepresence rooms, but only when they are
appropriate – when two groups of people need to meet in face-to-face meetings
for extended periods of time. Regardless
of what the manufacturers call it, the “one screen telepresence room” will fade
away.
This
leaves the third paradigm, the meeting room.
As stated above you’ll no longer go to a conference room just to make a
video call. However, if you have a real
need for an in person team meeting, and one or more of the required participants
can’t be in the place where the meeting is being held, video will be available
in appropriately equipped rooms to be utilized in much the same manner that the
speakerphone on the conference table is today – as a tool to allow this remote
site to join. This evolution of
conference room video will also bring richer collaboration tools, so teams can
share and interact with data and content.
With
these three models – Desktop Video, Telepresence and the Video Equipped Meeting
Room – we will see the end of the video conference room as we knew it, but at
the same time we will see the widespread adoption and continued growth of video
throughout our culture and businesses.
Death
to the video conference room – long live video conferencing!
------------------------------------
A View From
The Road is written by David Danto and contains solely his own, personal
opinions. David has spent 31 years in the audio visual and broadcasting
industries. He has designed facilities for firms such as AT&T, Bloomberg
LP, FNN, Morgan Stanley, NYU and Lehman Brothers. He has recently joined
JPMorgan Chase & Company and is the IMCCA’s
Director of Emerging Technology. Email David at David.Danto.IMCCA@Danto.com
About the IMCCA
The Interactive Multimedia & Collaborative Communications
Alliance (IMCCA) is a not-for-profit user application and industry focused
association with membership comprised of service and product providers,
consultants, and users. Members benefit from the understanding and the use of
various interactive and collaborative communications technologies in their
professional and everyday lives.
For further information please contact Carol Zelkin, IMCCA Executive Director,
at 516-818- 8184 or