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IVCi Taking Systems to New Heights
Newsday 04/18/2001 Wednesday - Page A 47
If it's a box with wires coming out of it, it's likely on its way to becoming a commodity item requiring accelerating sales to maintain the same profit. That axiom is what got the partners at International Video-Conferencing, Inc. thinking about their company's future.
It wasn't that video conferencing is anywhere near maxed out-an estimated 95 percent of conference rooms in this country have no video capability—but Adam Zeitsiff and Robert Swing wanted to insulate their company from declining profit margins as electronics saturate the market.
We didn't want to open the door one day and say, 'Jeez, we've got to sell these things for 10 points now, we're out of business,' Swing says. We wanted to be prepared for that and have some value-add. The result is a software package that not only lets customers schedule their video conferences, but also lets them assign times, dates and locations for just about anything else. The software gives us a lot more potential for a number of reasons, Zeitsiff says. It's obviously more profitable, and with regard to the customer base, every company has conferences and every company has scheduling conflicts. The two, who met as sales representatives for a computer systems integrator, started International video conferencing in 1995 to jump into a market that had made a giant leap toward acceptance with the setting of universal manufacturing standards in 1992.
In 1999, the partners say, their sales of video conferencing systems were $3.6 million. By last year, the number had reached $10 million. Clients include The Hartford insurance company, Merrill Lynch, Colgate-Palmolive, J.P. Morgan Chase Manhattan Bank and Bayer Pharmaceuticals. Zeitsiff says the company has outfitted several thousand conference rooms with video conferencing systems, allowing face-to-face meetings between participants spread far apart. The hardware, manufactured by such companies as PictureTel, PolyCom and Tandberg, costs from $8,000 to $50,000, depending on its sophistication.
At the outset, video conferencing had to be sold as a substitute. Back then, it was just travel, Zeitsiff says. If I could save you three plane tickets to the East or West Coast, it's paid for. It has since evolved into numerous applications—distance learning for universities and human resources departments, medical applications, finance companies, (stock brokerage) meetings on a national basis before the market opens. The natural extension to the scheduling of the rooms themselves began with the hiring in 1999 of Richard Blackwell, an Atlanta video conferencing veteran, as chief technical officer. The first version debuted later that year. Version 3.0 was introduced three weeks ago.
Zeitsiff, 27, and Swing, 33, decided that while video conferencing and scheduling had a lot in common, there was a greater potential for growth if the two were kept separate. The video equipment is marketed by International Video conferencing. The software is marketed by its Global Scheduling Solutions division.
One reason is that they want competitors on the video conferencing hardware side to become dealers for the Global Scheduling system. Another is that the scheduling software requires significant advertising and marketing, which on the video conferencing side is handled by the makers of the equipment.
Here, we're the manufacturer, Zeitsiff says of the software. We're taking on a new role as the manufacturer and developer of the product. The Global scheduler can be engaged by authorized users anywhere there is an Internet connection. Here's an example of how a meeting might be set up: The user selects a room in each of five buildings around the country where sales executives will gather. If any room already is scheduled, the user chooses among the alternatives. Each of the 30 invitees is automatically e-mailed with the time and location, as is the audio/visual department for extra VCRs, and the company caterer for food.
The software, which is licensed rather than sold, starts at $2,000 for a five-room license and ranges up to $60,000 for 500 rooms or more. The annual fee for maintenance and updates is 10 percent.
The first customer, six months ago, was a government health-care department with 25 video conference rooms. Since then, Zeitsiff says, the company has licensed about 20 more scheduling systems. The majority already were customers on the video conference side, but the partners expect that to change as Global Scheduling's advertising and sales force ramp up. They hope to sell 100 software hookups by the end of the year.
That's the nice thing about the product, Zeitsiff says. You just go out there and find anybody who's got conference rooms. That's why the product is so viable. International Video conferencing moved in November to 6,500 square feet of space in Hauppauge and now has 32 employees, nine of them assigned to the Global Scheduling division. Four more are being hired for regional offices.
We see both sides growing, Swing says. And we see the most profitable arena in the next two or three years to be in sales and support of the software. We also feel that video conferencing still has not taken that huge leap to be in every room yet. To further differentiate the company, Swing and Zeitsiff have begun a third division to install specialized audio/visual equipment necessary for custom video conferencing rooms. We always outsourced it, but we've brought it in-house, Swing says. audio/visual will be a big part of our business going forward. The partners hope that the combination will push the company to $14 million in sales this year, with video conferencing equipment generating two-thirds of the total and the higher-margin scheduling software and audio/visual splitting the rest.
We're not going to be considered a box pusher, Swing says. That's our mission statement, if you will. We are not a box-pusher.
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