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Videoconferencing helps companies cut travel costs

By Roger Yu, USA Today

6/23/09

Ben Weinberger, chief information officer of a law firm, typically travels about 25 times a year visiting colleagues around the country to make sure their information technology systems are working properly.

His employer, Lathrop & Gage, has 11 offices and 300 attorneys. But Weinberger estimates he will travel only once this year to each office, relying instead on videoconferencing from the main office in Kansas City.

The firm has six dedicated videoconference rooms there, with high-definition cameras, 47-inch or larger monitors, and software provided by California-based Polycom, a large videoconferencing equipment supplier.

"You don't have a meal with your colleagues videoconferencing," Weinberger says. "But I can save tens of thousands of dollars. If I go to the New York office only once, instead of going three times a year, I save the firm $3,000 (on airfare and hotels), and that's just me."

In a development that has airlines and hotels spooked, more companies are starting to agree with Weinberger's assessment. In 2008, the global videoconferencing market grew 24% to $2.4 billion, according to Roopam Jain, a technology analyst at Frost & Sullivan. The firm forecasts the market will more than double, to reach $5.7 billion by 2013.

Cisco, which uses its own videoconference equipment, says it cut annualized travel expenses by two-thirds in its most recent quarter, from $750 million to $250 million. TNT, a courier service company in Europe, saved about $16 million in the last three years by using videoconferencing, according to Norway-based Tandberg, which supplies TNT's systems.

"Change in the economic environment has led to (companies) reducing travel, and that has played well for the videoconference industry," Jain says.

Innovation spurs market

Rudimentary videoconferencing has been around since the 1980s, when digital telephone networks became possible.

Consumers began to embrace PC-based video-chat services from Microsoft, Yahoo, Skype and others once technology emerged to compress video files for quicker transmission. Newer entrants such as OoVoo focus on consumer video chats that can also be used in business settings.

Recent tech breakthroughs have helped to loosen business customers' purse strings, says Rick Snyder, president of Tandberg's Americas operation. Internet bandwidth is more plentiful and affordable. HD cameras can cost less than $200. More sophisticated chips can compress HD images with crisper resolution. Some vendors can help clients better manage internal computer networks so that video gets priority. "The movement to HD has raised the bar," Snyder says.

Large enterprises have dabbled at videoconferencing for years. Their latest toy is the so-called telepresence system — a setup with multiple 65-inch HD monitors and life-size images that let participants talk to each other without annoying audio hiccups. "Next time you see that person, you'll feel like you've met that person before," says David Hsieh of Cisco, which has been aggressively marketing the product since it introduced it in 2006.

Gee-whiz factor

Although it's relatively new, telepresence's dazzle has helped ratchet up consumer awareness. One commercial by Cisco depicts elementary school kids, continents apart, in a staring contest using telepresence monitors. High-end systems can cost up to $350,000, though cheaper options are available. "It gives you a sense of immersion," Hsieh says. "Two people (in different cities) can sit next to each other. They can have a hushed conversation. They can walk around."

Cisco worked with cinematographer Janusz Kaminski to develop diffused lighting in a white background to make people look as real as possible, Hsieh says. Cisco also discovered that file transfer shouldn't take more than a quarter of a second for the conversation to seem natural.

Tandberg uses blue walls for its telepresence system because it's the easiest color for people to disregard and focus on the person. To give two-dimensional images more life, it created "spatial depth" by using color, distance and lighting, Snyder says.

With costs falling, smaller businesses are being courted with systems that cost less than $10,000. Polycom and Tandberg have introduced products featuring 32- to 52-inch monitors and HD cameras that can be installed in boardrooms or on PCs.

Bob Brumm, senior systems programmer at Tampa Electric in Florida, says daily videoconference calls to seven service sites throughout the Tampa area are using a Tandberg system to let engineers update colleagues more frequently on operational issues. "The previous system was giving us headaches," Brumm says. "Now, people are making jokes and follow-up comments."

Richard Krulik, CEO of luggage maker Briggs & Riley, says HD videoconferencing has been useful in displaying designs. "You can just hold up the product."

Still, the industry has yet to completely address the issue of "inter-operability," or the ability of different systems to talk to each other seamlessly. Most high-end telepresence products can talk to cheaper videoconference systems. But some clients who've spent $350,000 for a multiscreen telepresence product may not be able to connect with similar systems made by their system's competitors, says Frost & Sullivan's Jain. "But it's heading that way."

Videoconferencing may not be for everyone. People who are camera-shy may clam up. If the camera is fuzzy and placed incorrectly, it may appear to some that people on the other line are trying to avoid eye contact.

"There are nuances you don't capture in video," Weinberger says. "There's always value in a handshake." End of article.


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