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June 7, 1999

Videoconferencing: Not Just For CEOs Anymore

Lower prices and easier-to-use products give more workers access to the technology

By Anne Zieger

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ntil recently, videoconferencing has been too expensive, too complex, and the performance too poor for the technology to gain a hold in many businesses. Companies implementing a videoconferencing system needed to set up special rooms with $100,000 worth of proprietary equipment and a dedicated staff in order to connect video callers in real time. As a result, few outside the corporate boardroom ever got to use the technology.

But videoconferencing isn't just for CEOs any longer, thanks to falling prices, easier-to-use products, technical standards, a proliferation of new technology, and a growing need among businesses to share information quickly and to collaborate. In recent years, videoconferencing has moved into the hands of midlevel managers who use it to solve everyday business problems. And it's becoming a common way to bring widely spread teams together, helping them to share data, expertise, and work processes, as well as the subtle personal cues that can be gleaned via facial expressions.

"Videoconferencing is shifting from being a tool used by Fortune 500 executives sitting in a boardroom into a workgroup and collaboration tool," says Todd Hanson, a senior networking analyst with Dataquest's telecommunications group. "People are not only sharing video information but also graphics, and doing collaborative whiteboarding."

Today, videoconferencing is used by a wide variety of companies in many different ways. Investment house BancBoston Robertson Stephens uses videoconferencing to connect analysts and investors; electric utility Entergy Corp. uses it to bring engineers into a long-distance huddle to solve power production problems; and attorneys at law firm Littler Mendelson use it to watch remote depositions in real time.

Videoconferencing has become a central part of life at BancBoston Robertson Stephens. The San Francisco investment firm begins every day with a videoconference among its five offices, letting its employees discuss candidates for initial public stock offerings, market trends, and other crucial developments before the market opens. "Videoconferencing used to be considered a luxury, but not mission-critical," says Richard Vidor, the firm's systems administrator for media systems. "Now it's got to work."

It has taken videoconferencing more than three decades to evolve to the point where a growing number of companies consider it part of their essential communications services. One key development was the adoption of videoconferencing standards that let equipment from different manufacturers work together over ISDN connections (H.320) and IP connections (H.323).

Bolstered by standards, the videoconferencing market has been growing rapidly, with the systems and services market climbing 38.3% per year, according to Frost & Sullivan. U.S. videoconferencing revenue hit $5.8 billion in 1997, the latest year available from the research firm.

The market is being fed by a new supply of less-expensive equipment options. Prices for end units--the devices that are used to set up a conference and display the video call--have fallen from roughly $60,000 per unit to as little as $4,000 to $6,000 per unit, depending on how much bandwidth they use and what features they offer.

Falling Prices
Much of the reduction in prices has come from the shift to set-top end units and the plummeting cost of PCs, which form the core of some standalone videoconferencing units. Many systems can turn a VCR-ready conference-room television into a videoconferencing station. Other videoconferencing systems--such as Intel's ProShare Video System--can turn a desktop PC into a videoconferencing unit by adding a camera, speakers, and a card for the PC.

Telecom carriers, who transport the video signals and combine--or bridge--the signals for multiperson conferences have also seen the use of videoconferencing blossom in recent years. Sprint, for example, has seen the fastest videoconferencing growth in more than a decade during the past couple of years, says Amy Holmes, group manager for Sprint's collaborative services unit.