Integration, cost cuts key to videoconferencing

It isn’t perfect, but desktop videoconferencing has come a long way from the techno wizardry research-and-development lab days to what it is today: a set of stable and interoperable hardware and software technologies tightly knit together through a GUI.

Products are more mature than ever, but fewer than one million people use personal videoconferencing. Forward Concepts, a market research firm in Tempe, Ariz., estimates that by the end of last year 41 per cent of the 830,000 desktop videoconferencing systems worldwide were in business environments.

When market researchers and vendors have asked users and prospective users what needs to be addressed to make desktop videoconferencing attractive to a critical mass of users, the replies have led manufacturers to press forward in three key areas: applications, networking and cost. Users want tight integration of video in mainstream applications such as Microsoft Office or Lotus Notes and options on deploying desktop videoconferencing such as through IP. And users want to do all that at the lowest cost possible.

Price trends

Costs for desktop videoconferencing are falling rapidly because of the availability of faster, lower-priced processors and the way the application uses the computer’s CPU for low-level tasks such as decompressing video and audio data.

Expect to pay approximately US$500 for the add-on kit to upgrade a PC that already has the necessary network connections. According to Forward Concept, that will fall to approximately US$200 per seat by 2002.

How much will a business need to budget on an annual basis? It depends. Anywhere from $1,000 to more than $3,000 annually per system. Total cost of ownership must be addressed for desktop videoconferencing to go mainstream. In general, the cost of infrastructure components drops (on a per-user basis) when a critical mass of users is deployed. One component, the cost of using a telecommunications network for long-distance connections, remains the highest persistent budget item associated with desktop and room videoconferencing applications.

But when compared with the cost of transporting a valuable expert or executive, the business justifications may be made.

Other factors

Aside from the continuous stream of network upgrades, maintenance and management considerations, other components of annual video application ownership cost include: the training of users on the new features of their existing applications, the transmission or transport associated with large media files/streams, and supporting “natural” meeting processes, such as multipoint calls and internetworking gateways for ISDN and IP terminals to communicate.


There are dozens of companies with desktop videoconferencing products on the market, but the industry is dominated by a small number of companies.

Intel Corp. is the undisputed leader in terms of 1998 unit shipments, according to Forward Concept. Intel attained that position through innovation and by leveraging the company’s brand recognition. Going forward, Intel has the opportunity to increase its market share by providing a full set of IP-based (H.323-compliant) network components that will work best with Intel videoconferencing end points.

Three other vendors in the desktop videoconferencing space merit mention. VCON Ltd. is charging to the desktop with a low-cost add-on kit. The company’s recent initial public offering provided the cash infusion necessary to sustain its advanced research in H.323 and expand its marketing partnerships, including those with networking companies such as Cisco Systems Inc.

PictureTel Corp., the market leader in terms of annual revenue in group video systems, has gradually lost market share in the desktop space. But recent engineering and manufacturing agreements with another industry leader, Zydacron Inc., are beginning to yield results in the desktop product line. One of PictureTel’s crown jewels today is its ability to provide a soup-to-nuts approach to large videoconferencing deployments. The company offers systems of all sizes.

Zydacron is a well-established H.320 desktop add-on kit provider. Its focus on high-quality manufacturing and providing a superior video and audio experience for users has made it the solution of choice for kiosk-based applications.

Perey is president of Perey Research & Consulting in Placerville, Calif., which provides strategic business development consulting services to the multimedia networking industry.

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