Concerns over terrorism and a lackluster travel industry position the 20-year-old technology for prime-time use.
When Nabi Corporation of Boca Raton, Fla., needed to tell employees about a major sale of assets last summer, it turned to videoconferencing technology to connect disparate company locations. Renting a videoconferencing room and equipment from Visual Interactive Solutions, also of Boca Raton, Nabi was able to avoid a "rumor mill-type situation," since some of its 2,000 employees were involved in the divestiture.
Nabi, a biopharmaceutical company, had discussed installing an internal voice/video network before, especially to connect corporate headquarters with a company research facility in Rockville, Md. Economic conditions forced Nabi to shelve those plans.
That changed when terrorists struck Sept. 11. Nabi executives and its business partners were grounded. Since so much of the company's work occurs during face-to-face negotiations with business partners, the company decided to dust off its plan and begin building a company-wide videoconferencing network. While the divestiture helped the company gain the financial footing to fund such a capital investment, security concerns prompted Nabi to act. "We had a business desire to implement a videoconferencing network, but we couldn't afford it until recently," said Jim Wilder, Nabi CIO. "Now that we can afford it, the heightened security issues relating to Sept. 11 have made it an even better business decision for us."
Tony Paez, chief executive officer of Visual Interactive Solutions, said Nabi's case is not unusual. Since the Sept. 11 attacks, VIS has experienced a 65% increase in demand for its services. Other service providers report similar surges of new business. Said Paez, "Under normal circumstances, a decision for videoconferencing is made on the basis of saving some time or saving some money. As of Sept. 11, businesses are looking additionally for an alternative to flying."
Growth spurt: one time or long term?
Evidence suggests videoconferencing technology, which has been around for about 20 years, may finally hit the mainstream. In a survey published one week after the terror incidents, the National Business Traveler's Association in Arlington, Va., found that 88% of companies plan to increase videoconferencing in reaction to travel-safety concerns.
Even before fears of terrorism, the voice conferencing market had grown nearly 40% a year during the last five years, according to Elliott Gold, a videoconferencing analyst and president of Telespan Publishing Corp. in Altadena, Calif. Gold likens the current climate to what happened during the Gulf War a decade ago, when the average increase in usage for both videoconferencing and voice conferencing was 25% to 33%. "The main thing we'll see is an increased number of meetings, with more of those meetings relying on videoconferencing."Avnet Corp. of Phoenix, Ariz., installed videoconferencing units on a point-to-point basis at its divisional and regional headquarters about three years ago. In June, the company unveiled a corporate broadcast center offering satellite broadcasts, videoconferencing and Webcasting. After Sept. 11, Avnet began offering its public viewing rooms and videoconferencing equipment for rent to other companies, which could turn out to be a new profit center, said Clay Stubblefield, vice president of corporate video services. "The nature of our business allows us the opportunity to work with major firms in a similar line of business that need to use videoconferencing technology. When you consider that a high-end presentation system may easily cost $10,000, plus services, not every company can justify that investment in capital equipment," Stubblefield said.
The videoconferencing factor
A typical videoconferencing system consists of a set-top box, high-quality camera, coder/decoder hardware, external microphones, and assorted other components. In contrast to the bulky and unwieldy technology of years past, newer videoconferencing equipment is more compact and accommodating. High-tech microphones are more forgiving of background noise. The new technology also is affordable for smaller enterprises. "One of the things we were delighted with is that costs for starter-type systems have fallen from about $100,000 per room to about $10,000 to $20,000," said Wilder of Nabi.
Image quality has improved dramatically, said Avnet's Stubblefield. "Five years ago, videoconferencing technology was jerky, hard to use and terribly expensive. Now there are more lines of communication and more infrastructure in place to support videoconferencing."
Although cost and complexity are not the impediments to adoption they formerly were, installing a videoconferencing system requires a careful assessment of your existing networks. For instance, Gold notes that larger companies with big data pipes probably already are preparing for the inevitable supplanting of ISDN lines by video over Internet Protocol (IP), which is still a few years away. Companies that start doing a lot of videoconferencing, Gold said, ought to appoint a manager to train users and schedule broadcasts.
Conversely, firms with smaller IT budgets may find it more cost-effective to rent video and voice conferencing from service providers, even while budgeting for emerging IP technology. "Within five years, all the projections say that 70% of (voice and videoconferencing) will be done via IP, and the quality of cameras and connections is gradually improving via IP," said Paez.
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This was first published in December 2001