Announcement #1 is H.323 interoperability. A year ago the folks at Cisco offered us a Stalinist philosophy towards telepresence, a strict hardline approach in which nothing should be allowed to shatter the telepresence illusion that the remote participants were in the same room with you.

An era of glasnost appears to be now upon us, political liberation if you will. The market has spoken, and while many customers seem to love the Cisco Telepresence experience, they are also asking for multiple conference room designs and the ability to bring in those industry standard videoconferencing systems we all know and love. The general architecture of the solution is shown in the diagram, which we have drawn as a multipoint call. Cisco systems will connect to the CTMS device (voice activated) that can switch whole systems or individual screens, depending on the users choice. CTMS preserves Cisco's 1080p video experience and spatial sound capabilities. All the H.323 systems connect to an MCU (based on Radvision technology). The CUVC buffers the Cisco world from all the vagaries of G.xxx and H.xxx and supports any endpoint or protocol supported by the Radvision MCU.  A single stream (768 kbps) from the MCU combines video from the H.323 endpoints and shows up on a single screen in the Cisco system. We saw a demo of this, and it indeed worked, but the CIF resolution and G.711 audio didn't make the H.323 world look very impressive.

Announcement #2 is the enablement of intercompany communications. Several of us at WR actually got to see this first hand when we were part of a call between a Cisco site in North America and a BT site on the other side of the pond. The demo shows the commitment by Cisco and partners to solve the riddle of maintaining security while permitting relatively open communications between enterprises. The vision, still a long way off perhaps, is to have a telepresence capability that emulates the old PSTN - this time it would be the Public Switched Telepresence Network. We've since talked to two financial services firms that think inter-company telepresence sessions would be very valuable, enabling them to talk to their partners or to other firms that they buy from or sell to. BT is clearly in the lead in working on this problem, but Cisco is carrier-agnostic (as long as it's Cisco-powered), and we would be very surprised if other network service providers weren't working along the same lines.

Announcement #3 was Cisco's claim that it had reached the 100 customer milestone with telepresence, with systems now installed in 40 countries. The announcement included the news that Proctor and Gamble is launching a network of more than 40 "video collaboration studios" (that was P&G's term, a clear reference to their Halo experience) using the System 3000, with about 1/3 of the systems already in place. Rumors abound that the P&G deployment could grow over time to 300 rooms. Meanwhile, WR's Brent Kelly reports that at the recent Cisco analyst conference John Chambers made the comment that Cisco would have to try hard to keep in front of P&G in terms of the total number of telepresence rooms deployed. Thus far, Cisco has 162, and it intends to have 244 by next July.

So, maybe the rumor is based on more than fantasy. There are some interesting dynamics going on here behind the scenes. P&G, we believe, has been a Halo (and Polycom) customer, and we also believe P&G is one of HP's leading services customers, having outsourced their IT to HP in 2004 in a 10-year deal worth somewhere in the neighborhood of $3B. Looks like the frontline of the telepresence war is located along the Ohio River right there in Cincinnati...

HSL's Thoughts and Analysis

I have been meaning to write about Cisco's big announcements for over a week but have been slammed trying to get caught up on Telepresence Options, our upcoming multimedia survey of telepresence and inter-networking telepresence.  You can sign up Here to get a free hard copy of the Telepresence Options 2008 Yearbook mailed to you when it is released in early 2008 or e-mail delivery of profiles and solutions reviews from the leading providers of telepresence and inter-networking solutions which we will begin releasing and posting to the Telepresence Options website in January.  Here are some quick thoughts:

Here Come the Telepresence & Effective Visual Collaboration CoINs

The biggest news in the announcement was that Cisco has launched their architecture for Inter-company telepresence. The acronym CoIN stands for Community of Interest Network and is the industry term I favor for inter-networking solutions that not only connect an enterprise to their branch offices for effective Intra-company business but connect them to their  joint-venture partners, vendors, and customers for effective Inter-company business.  This is the "Big Idea" in telepresence and the battleground that we believe will decide the winners and losers in telepresence managed services and inter-networking in the coming years. 

While telepresence and videoconferencing systems based on Internet Protocol (IP) have the capability to transmit real time interactive video over the "Internet" unfortunately the Internet is a "best-effort" network where delay-intolerant video packets must wait in line behind e-mail and websurfing.  When the IP packets that make up the video stream for a telepresence session get delayed, lost, or arrive out-of-sequence the result is a garbled picture that is distracting and "jolts" the participants out of what was an immersive experience. 

Enterprises that have been using IP videoconferencing have gotten around the problem of the best effort internet by deploying their videoconferencing solutions over dedicated circuits between point A & Point B or over their Wide Area Networks built by carriers like Verizon Business, MASERGY, or BT who use communications mechanisms like MPLS to ensure that delay intolerant voice and video packets arrive on-time and in-sequence.  While some providers like MASERGY and Wire One who specialize in network connectivity for high performance video applications run networks that can facilitate inter-company video calls, for a variety of reasons (cost, security, limited external video end points, low end-user demand, etc.) the overwhelming majority of networking solutions for enterprise videoconferencing have traditionally only connected a company's internal locations. 

The limited end-user acceptance and usage of traditional videoconferencing systems limited the interest in deploying relatively expensive high performance networking solutions.  In addition, the network is really only one part of the equation.  For large organizations interested in deploying dozens or hundreds of telepresence and/or videoconferencing end-points the systems require video network infrastructure, reservation systems, help desks, and experienced video and network technicians to keep the systems secure, reliable and easy-to-use.  Building this capability internally is both expensive and fraught with technical risk so most organizations have relied on videoconferencing managed service providers like Iformata Communications, Verizon Business (Formerly MCI), BT, and Nortel Global Services.  These managed service providers have either provided video services as a cost-effective fully managed service using shared video network infrastructure that resides at their facilities or used their expertise to build more secure solutions using network infrastructure that resides on the customer's premise.
 


Enter Telepresence CoINs and Managed Services

Telepresence innovators like TeleSuite (Now Polycom & Iformata Communications) and Teliris not only pioneered improving the end-user experience of the end-point but improved the utility by deploying telepresence CoINs that allowed their customer's telepresence systems to connect to those of the other clients on their network with the same high quality and security.  HP Halo Collaboration Solutions also deployed a Telepresence CoIN and a simplified global directory that allows participants to easily and securely connect with each other for Inter-company business. All of these companies also offer managed services that provide reservation services, help desk, and field maintenance.  We believe that the companies that develop the most effective telepresence CoINs and offer their customers the ability to connect to the greatest number of joint venture partners, clients, vendors, videoconferencing end-points, and publicly available telepresence systems will determine the ultimate winners and losers in inter-networking and managed services in the coming years. 

Cisco on the Sidelines... Kinda...

While Cisco has been shooting out the lights selling end-points it has largely been sitting on the sidelines in the battle to provide a Telepresence CoIN and Managed Services.  Kinda...  Because Cisco has to remain neutral in its relationships with the carriers and managed service providers that buy Cisco's big iron routers and networking gear it has chosen not to offer Cisco TelePresence as a fully managed service and/or build a telepresence CoIN itself.  I estimate the overwhelming majority of the 100+ customers have deployed Cisco TelePresence have done so on their own WANs or on dedicated overlay virtual private networks provided by carriers like AT&T, BT, MASERGY, and Verizon Business.  What Cisco has done is to create the Cisco Certified TelePresence connection program that certifies networks as "TelePresence Ready" (Although Cisco TelePresence is running fine on high performance networks like MASERGY) and has recently announced the development of a intercompany Cisco TelePresence architecture that they piloted on BT's network. 

While this strategy allows Cisco to remain neutral among its biggest carrier customers and has undoubtedly sold more Cisco networking gear to those enterprises who have had to upgrade their networks to support the high bandwidths and network quality that TelePresence requires it has limited the utility of the Cisco offering. While Teliris, Iformata, Polycom, and HP Halo have been building telepresence CoINs that now connect hundreds of endpoints and, collectively, over a hundred plus customers, Cisco, through their carrier partners are just getting to the big game.

The Big Game

The market opportunity for delivering telepresence network and managed service solutions is HUGE! Cisco has estimated that telepresence network services will be a $4 billion dollar opportunity by 2010. While I haven't seen how the Cisco breaks out the numbers (but would like to if anyone at Cisco is reading this and would be kind enough to send them to me) I am assuming the break out looks something like this snapshot of the market opportunity:

Note: This opportunity for delivering managed services and network is the same for all telepresence solutions not just Ciscos.

• Network Services - T1/E1/NxT1/NxE1/T3/Ethernet data pipes delivered as a dedicated overlay network or activated over a WAN connection provided by a network carrier that also runs a telepresence CoIN. This can cost $1000 - $20,000+ per month per location depending on the amount of bandwidth required by the system and what region in the world it is located.
  

• Managed Services - Access to managed telepresence and video network infrastructure including TelePresence Multipoint Switches, MCUs, Gateways, etc.  Outsourced help desk, field maintenance, etc.  Depending on the specific services provided can be $1000-$3500+ per month per endpoint.
  

• Network and Managed Services for Traditional Videoconferencing Endpoints - I know of companies that are deploying 30 telepresence endpoints and 100 plus high definition videoconferencing systems.  The network and managed services for traditional videoconferencing endpoints run north of $1000 per endpoint

So the telepresence industry has launched a market opportunity worth billions of dollars in a greenfield product category that doesn't cannibalize existing carrier or managed service provider revenue and improves the utility and usage of traditional videoconferencing.  The monies earned are high-dollar, recurring revenues (which Wall Street loves) from global Fortune 5000 companies and uber-sticky since once you get hooked up to a network or managed service provider it is quite hard to get disentangled. The solution improves productivity, time-to-market advantage, and the ability to collaborate globally with partners, vendors, and customers while reducing expensive physical travel and greenhouse gas emissions.  How's that for a winning combination!

It gets even better: There are a number of technological, economic and geopolitical trends which are priming telepresence for exponential growth:

• The growth of telepresence and effective visual collaboration CoINs - As discussed above the growth of telepresence CoINs is set to increase the utility of the existing installed base of telepresence end-points and improve the ROI and utility of deploying telepresence solutions.
  

• The interconnection of enterprise networks and telepresence and effective visual collaboration CoINs - Carrier neutral co-location and meet-me room providers like telx make it easy for enterprise networks and managed service providers to colocate their gear in carrier class facilities with direct connectivity to a variety of telepresence and effective visual collaboration networks.  Peering specialists like IP V Gateways provide peering solutions for real-time QoS telepresence and videoconferencing traffic between the major carriers whether the carriers want them to or not.
  

• Improved telepresence solutions and end-user experience - New solutions like the TelePresence Tech 70 inch system, the Digital Video Enterprises Tele-immersion Room, LifeSize Communications' LifeSize Conference, and the Cisco On-Stage experience offer a glimpse of what the future holds in both lower cost solutions and superbly realistic experiences.
  

• Improved Video Codecs - New high definition codec's like Polycom's HDX, HaiVision's MAKO-HD, and LifeSize Communications' Express are offering various combinations of superior video quality and revolutionary price points.
  

• Improved Communications Protocols and Standards -  New communications standards like Vidyo's H.264-SVC  promise to improve video performance and expand video capabilities and quality to a variety of devices including desktop computing, 3G handsets, PDAs, and laptops connected with EVDO-Rev A cards which will increase utility. 
  

• Globalization - Globalization continues and telepresence and effective visual collaboration will only accelerate the trend.
  

• The Collapse of the US Dollar - As we accurately predicted in 2006's Telepresence, Effective Visual Collaboration, and the Future of Global Business at the Speed of Light the dollar continues to collapse due to what can only be described as criminal mismanagement by the Federal Reserve.  This will have a number of implications for telepresence:

• Higher Fuel Prices and Physical Transportation Costs - Higher Fuel Prices equal higher ticket prices and reduced convenience of physical travel as airline profits suffer, consolidation continues, and unprofitable flights and routes are eliminated.

• Cheap US Exports - US exports are becoming cheaper and telepresence, one of the technologies where the US has a strategic competitive advantage, is becoming less and less expensive for foreign companies to adopt. In addition, cheap US exports will stimulate foreign trade which can be conducted more effectively using telepresence.
  

• Foreign Acquisition of US Companies - Again, as we accurately predicted in 2006, the collapsing dollar is reducing the cost of acquiring US companies. According to Larry Edelson in Money and Markets, through August of 2007 785 US businesses worth $129 billion dollars were acquired by foreign investors.  This dynamic seems to be accelerating in the past couple of weeks with foreign investors taking significant stakes in Citigroup and Morgan Stanley to name but a couple of high profile examples.  Telepresence and effective visual collaboration will become an attractive option for foreign owners to manage their new US assets. 
  

Hey Telepresence Industry - Buckle up your safety belts... 2008 looks like it is going to be one hell of a ride! 

Other:

Telepresence Options - We will begin posting Company Profiles and Solutions Reviews of the leading companies and solutions in the telepresence industry in January.  You can sign up for e-mail/RSS delivery or a free hard copy of the Telepresence Options 2008 Yearbook HERE.  We would like to welcome the latest Telepresence Options 2008 Sponsors: 

• telx - telx provides carrier neutral Meet-me-Room and Core Interconnection Facilities in North America.  Enterprise telepresence customers and telepresence network and managed service providers can collocate in telx facility for direct connections to a variety of telepresence and VoIP Community of Interest

• Vidyo - Vidyo's addresses known cost and performance challenges impacting the broad scale adoption of internet based video communication and collaboration. The company brings the price, performance and quality of video conferencing in line with user expectations by applying the H.264 Scalable Video Coding (SVC) standard to multi-point video conferencing.

HSL Graduates from Mindshare


In November I graduated from Mindshare (or the Dead Poet's Society for Entrepreneurs as it has been called) .  The program was superb, my fellow graduates fascinating, and the opportunity appreciated! I wanted to throw out a hearty Thank You to the organizing board that made it all possible.  Kudos to Mike Lincoln, Harry Glazer, Gene Riechers, Don Rainey, Kathy Penny, April Young, Michael Dering, Mark Esposito, Jeffrey Fialko, Kristi Hedges, Elizabeth Lewis, John May, Edward Meehan, Stephen Winings, and Mary MacPherson for putting on such a terrific program! 

Finally, Happy Holidays from everyone at the Human Productivity Lab and Telepresence Options!!