Businesses Turn to Videoconferencing After Attacks
Yahoo! News, 9/14/01
By JESSICA HALL
PHILADELPHIA (Reuters) - Indian technology consulting firm MindTree Consulting used videoconferencing to link its U.S.
workers to worried families back home after terror attacks reduced New York's landmark World Trade Center to a pile of
Two MindTree employees ran to safety from the crumbling Twin Towers, and the rest were elsewhere. About 20 percent of
MindTree's 450-person workforce is located in the United States.
Parents and wives of our employees were worried. Some of them do not know which place was where in the
U.S., said Srinivasan Janakiraman, president of technology at MindTree, which is co-headquartered in Bangalore,
India and Somerset, New Jersey.
The attacks by four hijacked airplanes on Tuesday sparked a surge in demand for videoconferencing services as
businesses and families tried to located friends and loved ones, and emergency workers tried to coordinate rescue
efforts. The unprecedented two-day ban on air travel also forced companies to find new ways to hold meetings or tend to clients.
After the attack occurred, we saw a gigantic spike in demand with people needing to communicate, and set up
emergency assurance, said Ken Hayward, chief executive of VSPAN, which coordinates video, audio and Web-based
conferencing services for business meetings, events and training.
The King of Prussia, Pennsylvania-based company, which typically handles about 3,500 corporate clients a day, has seen
a 30 percent to 40 percent increase in traffic since Tuesday's attack. VSPAN expects the surging demand will require it
to almost double its business in the near term.
When President Bush left Florida and went to the Midwest and video conferenced with his advisorsthose are
the kinds of things that cause people to realize that videoconferencing, for price, convenience or security reasons, is
a viable option, Hayward said.
Companies such as VSPAN, MCSi Inc. and merger partners Polycom Inc. (Nasdaq:PLCM - news) and PictureTel Corp.
(Nasdaq:PCTL - news) offered free video conferencing services to aid with the disaster relief efforts.
The tragedy itself, the failure of not being able to get from one place to another, being stranded out of
contact, will probably have an impact on use of technology because travel is unpractical or scary, said Polycom
executive vice president Jules Devgne.
Analysts said the video conferencing industry also saw a jump in demand immediately after the crashes of Pan Am Flight
103 and TWA Flight 800, and during the Gulf War (news - web sites). But the cost of video conferencing has fallen
sharply since then, and analysts said the recent surge in business could last as this week's disasters and the
aftermath cool international travel.
Americans typically seem to have a short memory span. A month after things happen, they go back to normal, but I
think this is different. I think this was sufficient in magnitude that it could change people's behavior, said
Andrew Davis, managing partner at Wainhouse Research, a market research and publishing firm specializing in conferencing.
There's now a fear factor that didn't exist before. And with new security measures being put in place, business
travel will become more painful. You'll need to be at the airport earlier and stand in more lines longer -- business
people hate that. Your one-hour trip to New York now becomes a four-hour odyssey that is also more expensive because of
the extra security, Davis said.
VSPAN noted that technology improvements and the growth of the Internet have helped cut prices for videoconferencing
rooms to about $10,000 per site from $100,000 just a few years ago. Videoconferencing tools, costing about $500, can be
installed on a personal computer desktop for individual use, analysts said.
The savvy business will realize they will be able to accomplish much of the goals they wanted to handle by
traveling via videoconferencing, Davis said.
The size and growth of the video conferencing industry can be difficult to gauge, analysts said. There are equipment
and infrastructure manufacturers as well as service providers who transmit the video traffic, organize calls, run
conference rooms and deal directly with clients.
A recent report from Frost & Sullivan said U.S. video conferencing services revenues may climb to $5 billion by
2007 from $1.48 billion in 2000. Wainhouse, meanwhile, expects the conferencing infrastructure sector to grow to $1.25
billion in 2005, up from $375 million in 2000.
In a video conference, each location is equipped with a camera, microphone, monitor, and signal management device.
Video calls can be connected over traditional telecom or high-speed broadband networks.
The industry had already seen a boost in demand as the recent economic slump forced many corporations to clamp down on
travel expenses. A survey by Runzheimer Reports on Travel Management earlier this year found that about 36 percent of
companies seeking to cut domestic travel costs used videoconferencing.
It's extremely easy to cost-justify this equipmentsomething costs $5,000 can be paid for in the savings of
a few first-class tickets, Devgne said.