Videoconferencing for years was the only alternative to the in-person meeting. Equipment and networking costs limited the customer base to large multinational and free-spending corporations. With the rapid reduction in pricing, video solutions have become more compelling as a way to rein in spending. The advent of bridging technology has significantly reduced the cost of holding meetings versus running separate audio and videoconferencing systems. Despite these advances, the need for equipment at multiple sites and a bridge to manage the process of patching participants into the meeting still limits the cost-effectiveness of video solutions versus Web-based products. Currently a videoconference call over a dedicated line to the United Kingdom is roughly $6 per minute. That same call over the Internet is $0.10 per minute. Facing tough economic times, more corporations are compelled to choose a Web-based product. Moreover, the advancement in the quality of Web-based conferencing solutions and the mass appeal due to ease of use and initial startup has made the decision less about price and more about productivity. As the bandwidth requirements are compressed and the network transfer of data improves, the “real-time” feel of Web-based videoconferencing should eliminate any quality concerns.
Going forward, Web conferencing will continue to eat away at the foundation of the videoconferencing business. If the economy continues to struggle, and terrorism and war limit travel, the rate of market share gains by Web conferencing will continue to accelerate. Businesses want to collaborate online with document sharing, annotation, project management, etc. More importantly, they want to do it on the fly and cheaply. With Web conferencing’s ability to blend a telephone call with an online meeting, attendees can participate in an interactive experience that includes instant messaging, polling and other collaboration features. In addition, the meeting can be recorded and reviewed by others with no additional costs. The latest product introduction by industry leader WebEx now offers multi-point video capabilities of meeting participants with the addition of inexpensive off-the-shelf PC video cameras. WebEx with its MediaTone technology has put the videoconferencing providers on notice that it is a true business solution.
We see videoconferencing leaders such as Polycom and Tandberg in a similar position as companies that were outflanked by the personal computer. Web conferencing offers ubiquity, which, as evident in customer, revenue and profit growth by Web providers, is very compelling. To Polycom’s credit, it has not stood idle as its market share has eroded. As more customers move online, Polycom has made strides in unifying the conferencing experience with is WebOffice suite, which integrates voice, video and Web collaboration. Competitive pressures have and will continue to force Polycom and others to inch further into Web conferencing.
Most notable was the acquisition of PlaceWare by Microsoft. This deal goes a long way toward validating the online collaboration market and will no doubt turbo-charge its path to a becoming a mainstream technology. We no doubt will see additional consolidation in the Web conferencing industry as traditional enterprise conferencing providers recognize the need to offer this product application. We believe Microsoft’s deal could compel IBM, SAP, Oracle or even Siebel to enter the fray. In any event, CLOs should not discount the value and effectiveness of Web conferencing as a competent business and learning tool.
Peter L. Martin, CFA, is an author and consultant, providing in-depth coverage of the knowledge services industry.
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