An article from Investors Business Daily on the coming battle between HP and Cisco in the telepresence industry and the 300%-PLUS growth from both vendors with some thoughts and analysis from HSL on who will be the big winner. We will be launching a full analysis of the HP Halo Meeting Room vs.Cisco and the other modular telepresence systems in the market and a comprehensive update on the State of the Telepresence industry the week of September 10th when we launch our annual multi-media survey of telepresence and inter-networking telepresence: Telepresence Options 2008. Sign up for the Lab's newsletter The Art of Productivity on the left hand side of the screen to receive the analysis and our State of the Industry Survey the week of September 10th and a free hard bound copy of Telepresence Options 2008 when it is released in January 2008.

HP Vs. Cisco in Videoconferencing
By Brian Womack -
Investor's Business Daily-
Posted 8/27/2007

Hewlett-Packard is firing back at Cisco Systems in the battle for high-end videoconferencing sales. On Tuesday, HP plans to unveil a high-end videoconferencing system that is cheaper and easier to set up than its earlier system. About a year ago, Cisco shook up the high-end videoconferencing market with its first such system.
 


"It's a response to competition," said Ira Weinstein, an analyst with Wainhouse Research. "It will certainly help them win more deals."  The HP Halo Meeting Room in a Conference HP's new systems will cost $249,000 per room, says Ken Crangle, general manager of HP's high-end videoconferencing systems, marketed under the Halo brand name. The existing Halo system costs $349,000. The new Halo is just one announcement slated Tuesday by HP's Imaging and Printing Group, the company's most profitable unit. The group is unveiling its "Print 2.0" strategy, complete with new slogan, in looking beyond basic printer sales to drive its growth.

Small Market, Today

The new Halo's price might sound steep, but it's no simple system. It's designed to make users on both sides of the screen feel as if they're in the same room, though they might be on opposite ends of the globe. Halo, like Cisco's TelePresence videoconferencing system, uses multiple cameras, fancy screens, audio systems, lighting and video to create conference rooms for remote, high-level meetings. The idea is to cut a corporate customer's travel expenses by reducing how often meetings have to happen in person. The high-end videoconferencing market is just taking off.

Research firm IDC expects sales to nearly triple this year to $169 million from just $64 million last year. It sees sales of $1 billion by 2011. HP, which introduced its first Halo in late 2005, and Cisco have brought much attention to this market. "This is almost a coming-out year," Weinstein said. IDC analyst Nora Freedman says Cisco and HP have about a third of the market. "It's highly unlikely you're going to lose your job betting on a Cisco or HP product," Freedman said.

Other players include Polycom and privately held Teliris. This high-end market differs from the lower-end online conferencing field, which offers basic cameras attached to PC monitors. The older versions of Halo required that customers basically gut a room and go with all-Halo equipment, including lighting and chairs. With the new version, users can cut costs by adapting existing conferencing rooms, to a degree. The change is what Weinstein calls "room enhancement" instead of "room replacement."

"We're loosening up a bit," HP's Crangle said, "but it's basically the same experience." Cisco's TelePresence systems are a bit more expensive than the new Halo, at about $300,000. But Cisco approaches sales and maintenance differently, and analyst Freedman says the costs could end up being about the same.
 
The Cisco CTS 3000 TelePresence System - (Image Hiroko Masuike for The New York Times)

Another big change with Halo is that the system can communicate with more basic, lower-end videoconferencing systems. Thus, both parties in a videoconference would not have to have a high-end system. This will help HP as it battles Cisco in the emerging market, Weinstein says.

Cisco, known mostly for its routers that direct Internet traffic, has been putting a lot of energy into TelePresence. Even Chief Executive John Chambers has been talking up the products. "This is the first time in my career that I have seen this type of excitement and interest from CEOs for a technology," Chambers said this month about TelePresence, in a conference call with analysts to discuss Cisco's latest quarterly financial results.

TelePresence requires beefy networking systems to carry the video transmission. That drives Cisco's core router and switch businesses. "Cisco makes money no matter whose system is deployed," Weinstein said. "Cisco is definitely a behemoth. Cisco definitely is moving some systems."

300%-Plus Growth Rates

In the conference call, Chambers said that in the third fiscal quarter ended April, "TelePresence systems orders grew from the prior quarter by over 300%. In Q4 (ended July 28), the number of TelePresence systems grew by over 400% from Q3." HP's Crangle says Halo revenue rose "well over" 300% last quarter, ended July 31, from the previous quarter. Crangle also says Cisco helps bring attention to this sector. Before Cisco, Halo had only two accounts, he says. "I think Cisco and HP . . . compete on every single account," he said.

Besides Halo, the imaging and printing unit is expected to unveil a $300 million marketing campaign that asks "What do you have to say?" HP, then, hopes you use its printers and imaging products to help say it. HP will unveil printers and other products and services that target multiple markets. Vyomesh Joshi, HP's head of printing unit, says HP wants to drive more collaboration, which HP says will drive more printing and imaging.

HSL's Thoughts and Analysis

We are going to be releasing a more detailed analysis of the modular telepresence group systems when we officially launch Telepresence Options 2008 the week of September 10th so my thoughts and analysis today are more about the some of the other interesting tidbits in Brian Womack's story and my thoughts on who wins:

300%-Plus Growth Rates - The article reports that Cisco has divulged: "TelePresence systems orders grew from the prior quarter by over 300%. In Q4 (ended July 28), the number of TelePresence systems grew by over 400% from Q3." This is starting to translate into a significant number of systems shipped. In a recent article in The Economist it was revealed that Cisco has signed up 52 different companies who have purchased an average of five systems or ~ 250 systems. 

In talking with the folks from Cisco for the analysis piece we are working on for the week of September 10th they confirmed that 52 Telepresence customers is already an old number and the total doesn't include their own internal deployment of an eventual 120 systems or the 50 TelePresence Systems that Regus announced they will be making publicly available in their shared office locations. Not a bad first year for a high-dollar, version 1.0 product in an industry segment that was virtually unknown until last year that additionally requires a re-engineering of the corporate network and/or expensive managed services and an overlay network to boot.

Ken Crangle, the General Manager of the HP Halo Collaboration Solutions business unit, also reported "well over" 300% growth in the 3rd quarter and the HP Halo solution wraps up a true QoS network, help desk, and field maintenance into a flat rate recurring cost of $18,000 per month per studio which continues to deliver revenue into perpetuity. With a reported 120 rooms (~35 are assumed to be internal to the company) HP shareholders have got to be loving that... Cisco and HP's stellar growth comes on the heels of announcements by other industry players that are also shooting the lights out.

Teliris announced in June they had signed 11 new global customers who had signed up for 50 new systems in a recurring revenue managed services model similar to HP Halo. In July Telanetix announced that record contract wins had created a 3rd quarter backlog for the company. I have heard through the telepresence grapevine that Polycom and the less well know telepresence system vendors like Digital Video Enterprises and Telepresence Tech are also doing superb as well.

So who wins in the battle between Cisco and HP?
Answer: The emerging telepresence industry and the network providers that inter-connect them as a whole!
Cisco and HP's entrance into the previously tiny telepresence pond is lifting all boats and these ships require high-bandwidth, low latency, delay-intolerant, state-of-the-art IP networks to float! This doesn't just include the aforementioned telepresence system vendors but also includes the entire emerging telepresence eco-system including:

Telepresence Managed Service Providers: Iformata, Nortel, IVCi, BCS Global, York Telecom, and Avaya to name a few...

Carriers, IP network providers, and inter-connection providers: MASERGY, Hibernia Atlantic, BT and BT Conferencing, AT&T, Verizon Business, SprintNextel, Savvis, WireOne, Glowpoint, telx, and others.

Telepresence sub-system and peripheral vendors: HaiVision, Tandberg, Polycom, LifeSize, Electrosonic, Polyvison, WolfVision, SMART Technologies, Codian, Sony, and others.

Telepresence Systems Integrators: Dimension Data, Presidio, The Whitlock Group, ATK Services, and others.

Networking Equipment Vendors: Cisco Systems, Juniper, and others.

Publicly Available Telepresence Providers: PangeAir, Regus, and others that will eventually enter the market.

Telepresence Analysis and Consulting Firms: The Human Productivity Lab :-) And this is a trend that seems to be picking up steam. I caught this little nugget of data from a recent report entitled:

Telepresence: Seeing is Believing by Peter Brockmann of Brockmann and Company.
 

The number of folks that are searching Google for information on "video conferencing" is going down while the number of folks searching for information on "telepresence", which was essentially non-existent prior to Cisco entering the market in October of 2006 is on the rise. This is a trend that is sure to accelerate as some portion of the $300 MM dollar ad campaign the HP Imaging and Printing Group (which HP Halo Collaboration Solutions is a part of) is launching gets devoted to HP Halo and telepresence. I am assuming that Cisco and Polycom are planning to put up a fight as well so expect interest in telepresence to increase. This dynamic is especially apparent in the growth of traffic to the Lab's website which continues to skyrocket along with subscriptions to our newsletter and inquiries by the media and trade press.

 

Brockmann's analysis and advice on this trend:

"These shifts in search frequency... confirms for Brockmann & Company that video conferencing managers, vendors and service providers would do themselves a good service to transition their use of the words 'video conferencing' as it pertains to room video conferencing in marketing and implementations towards the high quality aspirational term of 'telepresence'."

2008 appears to be shaping up to be one hell of a year for the emerging telepresence industry! Other: Get our complete analysis of the HP Halo Meeting Room vs. Cisco and other modular group telepresence systems and our State of the Telepresence Industry Survey the week of September 10th when we launch our annual multimedia guide to telepresence and inter-networking telepresence: Telepresence Options 2008! In our state of the industry survey we will be sharing some of the advice we have for the delegates to the European Financial Services Technology Summit in Lake Geneva, France in October.

Executive Summary: The dying US Dollar, the end of the Yen carry trade, and the imploding housing bubble mean rough waters ahead for global business. Our suggestion: Invest in productivity, telepresence, and effective visual collaboration to weather the storm. How the ability to effectively collaborate globally at the highest quality with the greatest potential number of customers, vendors, and joint venture partners will separate the winners and losers in the months and years ahead. Sign up for the Lab's newsletter The Art of Productivity on the left hand side of your screen to receive our State of the Telepresence Industry update the week of September 10th and a free hard copy of Telepresence Options 2008 when it is released!
 

Telepresence Options is the Lab's annual guide to telepresence systems, telepresence managed service providers, network providers, telepresence systems integrators/pro AV and telepresence sub-systems and peripherals. Telepresence Options 2008 will be published in print and available in downloadable PDF in January 2008 and will take up where Telepresence, Effective Visual Collaboration, and the Future of Global Business at the Speed of Light (the most authoritative and widely read publication on the subject of telepresence ever) left off.