Videoconferencing Comes of Age
As Cost Tumbles, Flexibility Grows
By KEVIN J. DELANEY
Staff Reporter of THE WALL STREET JOURNAL
Videoconferencing stands out as one of the worst returns on investment in
the business world -- until recently, that is.
Over the past two decades, companies shelled out hundreds of thousands
of dollars for room-size systems, proprietary software and expensive
networking services, basically so they could have phone calls with pictures.
While videoconferencing initiatives sometimes veered off into Star Trek
dimensions, the goals generally were clear. Firms -- especially those
caught in the globalization frenzy -- wanted their employees to connect
with remote colleagues and customers in a manner more meaningful than a
scratchy conference call. If they couldn't shake a person's hand, they could
at least smile and wave. And with travel expenses skyrocketing, what
executive doesn't dream of finding ways to avoid shelling out thousands of
dollars for another business-class flight?
But, in some cases, that dream turned into a nightmare. Firms found their
videoconferencing suites unused except for an occasional executive-level
meeting. The communications technology was imperfect: Video and voice
wouldn't always match up. Often protocol differences prevented a
company from communicating with companies that used other
manufacturers' systems. And the cost savings? Travel budgets continued to
rage out of control, as videoconferences were used to replace telephone
conversations rather than business trips.
A Radical Shift
The verdict was clear: The videoconferencing systems being sold to
companies were a money pit.
"They were too expensive for what people got out of them," says Alena
Carroll, a strategic analyst with Frost & Sullivan, a U.S.-based
consultancy.
That had to change, especially because even information-technology
departments are having to prove their contribution to shareholder value.
And indeed, videoconferencing options have shifted radically in the past six
months. For starters, prices for systems and services are nearly in a free
fall. Then there's Internet protocol technology, which allows information to
be routed more efficiently over standard networks. IP technology is easy
to hype, but in this case it means companies can carry video traffic for a
fraction of the cost. Perhaps more important, it's contributing to a
convergence of multimedia technology that promises to integrate
videoconferencing into a wide range of other business applications.
Videoconferencing is suddenly becoming a no-brainer.
Last year, however, it was a nonstarter for PSDI Inc., a U.S.
business-software firm with offices in Europe and Asia. The company's
information-technology director, Jim Chilton, proposed installing systems
at seven of its more than 25 offices world-wide, hoping to cut business
travel and improve communication. The PictureTel-brand system he sought
was going to cost $175,000 (167,200 euros) to put in place. On top of
that, the annual tab for video communications link-ups between the sites
was going to run another $147,500.
That was too much for his board to swallow. One director quickly
torpedoed the proposal, predicting employees would never use it enough
to justify the expense.
Plunging Prices
But Mr. Chilton has taken up the project again. This time around he has
designed a videoconferencing setup that should cost less than $20,000 to
roll out. He predicts the communications expense will be a small fraction of
the original proposal. The core of the system is Microsoft Corp.'s
NetMeeting software, which is free in some cases, and $120 digital video
cameras that can be bought off the shelf. Using IP technology, the video
traffic runs over the company's existing network, with connections to the
sites overseas.
"It's such low cost that I can get it under the radar and get it deployed,"
says Mr. Chilton. The image quality, while not quite as good as the
high-end systems, is "reasonable," he says, and given the price, "you can
live with a little shakiness on the image side."
Even the mid- and high-range systems are becoming more affordable.
Frost & Sullivan's Ms. Carroll estimates that the cost of some of them
have dropped by as much as 80% over the past few years. "The prices
have declined and there's no reason to think that's going to stop," she says.
The newest videoconferencing systems are not only cheaper, but they're
more flexible. For example, companies now can archive the video for
future viewing. That's especially useful for training, corporate
announcements and strategic meetings. Sessions can be reviewed later by
people who couldn't make it the first time around. And, using standard
Internet video formats like that developed by RealNetworks Inc., the
video clips can be posted on Web sites and e- mailed to staff.
While Cisco Systems Inc.'s use of videconferencing in Europe is relatively
limited, the company has integrated downloadable video clips -- a
technology often called "video streaming" -- into its communications,
according to Yvon Le Roux, a vice president at Cisco Systems Europe.
The networking company has developed a service that it calls "CiscoCast."
Roughly 10 times a week, employees are notified that there are 90-second
video clips available over the network to brief them on different topics.
They can watch these from their desktop PCs.
"Over the next two years, you're going to start to see a blurring of the
technology lines that provide multimedia within the enterprise," says David
Dines, a senior analyst at Aberdeen Group, a U.S.-based consultancy. His
company's staff meetings are currently conducted through
videoconferencing and archived for employees that missed them.
Already, NetMeeting and other software packages let people in remote
sites work off the same computer document -- say a PowerPoint
presentation -- while their videoconference is going on. It's those sorts of
integrated applications that will speed the adoption of videoconferencing,
as it becomes an additional, inexpensive channel for communicating. "You
can just walk into a conference room and, like you might do an ad hoc
meeting, take the camera and swivel it around," says Mr. Dines. "It's a lot
less of a big deal to get it going.'' |
