The problem with the telepresence picture

Cisco has set itself a tough sales target for its TelePresence videoconferencing suite.

Chief executive John Chambers said in August 2006 that the networking specialist planned to earn $1bn (£500m) from the product in the next five to seven years. It's been slow going, however, with Cisco selling just 24 units in Europe up until January this year, 15 months after the videoconferencing suite's launch.

David Molony, principal analyst of the IP enterprise team at Ovum, calculated that there are currently between 225 and 300 high-end videoconferencing, or telepresence, system customers worldwide, totalling the figures from the top five vendors: Cisco, HP, Polycom, Tandberg and Teliris.

The lack of sales, however, isn't due to a lack of quality. The technology offers an incredibly rich video experience and there is the potential for organisations to integrate it with the rest of their IT infrastructure.

"It's very impressive," said Molony. "The quality is so good. And there is the ability to do unified communications: video integrated with voice and data, all in one environment."

Molony predicted that many businesses will buy a telepresence offering this year and that the number of sites with a telepresence room will quadruple by 2010, albeit from a small base.

So, if the quality is there, what has stopped businesses buying the technology so far? 

Firstly, many businesses will have been put off by the price tag. Cisco's three-screen offering costs $300,000, Polycom's costs from $200,000, and HP's costs $349,000, following a recent 36 percent cut in the list price of its product. Those costs are per site and are exclusive of installation and ongoing service costs, meaning they are only affordable for the largest corporate organisations.

"The cost and the footprint required make it of greatest interest to the largest companies," said Ira Weinstein, partner and senior analyst with Wainhouse Research. "It's a Fortune 5000 play."

With HP making the first move with its price cuts, that looks set to change. As sales increase, so vendors' costs will drop, leading to more price-competitive offerings, according to Weinstein.

"We will see costs coming down," he said. "The flavours [of telepresence] will change to make it more appealing to [SMEs]."

Another factor which might help affordability is the provision of telepresence as a managed service.

The managed-service concept is in its infancy, with many still watching the development of the technology, but there have been two announcements of note: Regus has installed TelePresence at some of its serviced offices and it now rents those TelePresence rooms to its clients; and BT is developing a service around Cisco's offering.

One of the advantages a telco could bring, in terms of a managed service, is the ability to form a bridge between different vendors' systems, so, for example, a business on a Cisco system could hold a telepresence call with a company on a Polycom system.

Proprietary lock-in
The issue of interoperability has so far proved thorny.

Businesses can usually now get their telepresence system to talk to a non-telepresence system, particularly if both are based on the H.323 audio-visual standard, which most are. Of course, a vendor's various telepresence systems will also communicate with each other.

But, with a small number of exceptions, the result of trying to get one telepresence system to communicate with another vendor's telepresence system will be horribly unsatisfactory.

"Telepresence-to-telepresence interoperability is tougher," said Weinstein. "If you get connected, you won't have a good telepresence experience because you will have to work to the minimum [common] standards."

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As well as price and interoperability concerns, another big issue is bandwidth: at 5Mbps per screen, it doesn't take long to fill most companies' wide area pipes.

"You need to make sure the network is up to the task," added Weinstein. "Be prepared to pay for a dedicated overlay network from the vendor. If you push back [at the vendor], you could be sacrificing the experience [of the conference]."

Supporting the wider IT strategy
Molony advised that businesses should spend considerable time working out the financials before committing on any telepresence investment. "You should have a very strong business case. It's more than a simple ROI," he said. "You've got to think of it as part of the business's technology roadmap. Does it fit with your IT strategy? Do you have a strategy for unified comms?"

Though vendors' equipment used to vary considerably in terms of support for multipoint conferences and the bandwidth they used, for example...