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Vendors tackle high telepresence costs

April 2, 2008 | Chris Payatagool

ZDNetLogo.gifBy Richard Thurston  ZDNet.co.uk

Faced with tough internal sales targets but stuttering revenues, the
five major telepresence vendors are trying to encourage more companies
to adopt the high-end videoconferencing technology.


Selling telepresence has been difficult. The vendors have set their prices sky high and HP, Cisco, Polycom, Tandberg and Teliris have found customers hard to come by.

The quality of the technology behind telepresence - the latest evolution of videoconferencing - has rarely been in doubt. Telepresence uses high-definition audio and video to present life-size images of participants in the best videoconferencing suites yet designed.


Yet the stumbling block has been the price. Few potential customers have questioned the quality, but many have baulked at the cost. When HP came to market with its first product, Halo Collaboration Studio, it started charging $549,000 per site. Cisco launched its full version at $300,000 per site, a price it's still charging, and Polycom's systems go from $200,000 upwards.

Vendors have remained largely tight-lipped about how many of the products they have sold. David Molony, principal analyst at Ovum, estimates only 225 companies have bought telepresence from the top-five suppliers.

While keen to bolster these sales figures, vendors had not been prepared to compromise on their sky-high prices; until last month, when HP introduced a new telepresence product at a vast discount. Its announcement could encourage other vendors to follow suit, and prise open the market for widespread adoption.

Halo Collaboration Center is technically the same as its predecessor, Halo Collaboration Studio, but is far quicker and easier to install according to HP, and comes in at one-third of the price.

The new release of Halo doesn't require a dedicated room, unlike Collaboration Studio and, as it has movable front and back walls, it could fit into an average-sized office.

The system has just two screens - one for the conference and one for video or document sharing - and it seats up to four people. It's priced at $120,000 per site, although service fees - mandatory for HP's offering - total $12,000 per month.

"We originally designed Halo for larger teams, but we are seeing people using it more for one-on-one, two-on-one meetings, and you don't need a full room for that," said Ken Crangle, HP's general manager for Halo.

Collaboration Studio is much larger, featuring three screens for conferencing and seating up to six people. It sells for $349,000, which has itself been drastically reduced since its launch two years ago.

The price cuts could go a long way towards stimulating interest in telepresence, particularly with many companies looking for ways to reduce time spent travelling due to environmental concerns. But for potential users, there remains a nagging concern about interoperability.

While vendors say they offer interoperability between their own and their competitors' products, what they usually mean is that their telepresence equipment will communicate with non-telepresence equipment from other vendors. The proprietary nature of telepresence makes it rare for two telepresence systems to be able to communicate sufficiently to provide a high-quality conference. In January, Cisco's European president Chris Dedicoat discouraged companies from trying cross-vendor conferencing, saying they would be disappointed with the experience.

Speaking to ZDNet.co.uk last month, Crangle admitted HP was "working with all the other vendors out there". However, when pressed on the issue, he revealed that HP's telepresence is not interoperable with either Cisco's or Polycom's and, when asked if he would like to make HP's sytem interoperable with Cisco, Dedicoat refused to comment further. "I don't have anything to say about that right now," he said.

If the interoperability stand-off can be resolved, the lower prices might trigger wider acceptance of telepresence. Further initiatives may help. Marriott, the global hotel chain, said last week it would start to offer HP's telepresence in some of its hotels.

Though it did not say how many hotels, or where, it is understood that the service will become available in some of Marriott's 70 hotels in the UK. The service is designed to appeal to traveling business people who want to conference with colleagues or business partners, but who are distant from one of their own conferencing rooms. Marriott is likely to charge for the service on an hourly basis.

And Regus has a similar setup, offering Cisco's telepresence to tenants of its managed offices.

Meanwhile, one application showing potential to spur the deployment of telepresence is telemedicine. One of Cisco's telepresence units is currently being used to help doctors remotely diagnose patients in Aberdeen, Scotland. Although the unit is only being used in a trial, the organisation behind that trial, the Scottish Centre for Telehealth, is hoping to deploy telepresence across several remote Scottish locations.

[via ZDNet.co.uk]







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