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Telepresence Managed Service Providers - Glowpoint, Iformata, and Nortel with Howard Lichtman's Thoughts and Analysis

July 23, 2008 | Howard Lichtman

According to industry analysts the market for telepresence managed services could be worth up to $4 Billion per year in the coming years.� Perhaps this is why telepresence and videoconferencing managed service providers have been in the news lately with BT Conferencing acquiring WireOne Communications in April and Nortel Global Services announcing a deal to provide managed telepresence and videoconferencing services to as many as 130 of Deloitte's member firm locations around the world.� A deal that could be worth, by my back o' the napkin calculations, up to $25MM+ a year in revenue depending on the final mix of telepresence, traditional videoconferencing end-points, and network connections. So when I saw that our friends at Wainhouse Research had interviewed Glowpoint CEO Mike Brandofino I though our audience would be interested in what he had to say.� I also interviewed Hugh McCullen from Nortel Global Services and Brian Kinne from Iformata Communications as well and threw in some of my thoughts and analysis for good measure


The following is an interview with Glowpoint CEO Mike Brandofino from the always insightful Wainhouse Research Bulletin.

WRB: Glowpoint seems to have come back from the dead ... congratulations ... give
us a quick update on your status today; what are your major revenue segments ....

MB: Thanks and yes, to use a Mark Twain quote, "The rumors of our death have been
greatly exaggerated". The fact is Glowpoint lost a little focus a few years back and had
to overcome some issues, but we have been making major strides. Since my team took
charge in 2006, we have grown revenue by over 30%, improved sales from our channels and cut our annual operating expenses by over $10 million. Our revenue is primarily made up of subscriptions to our managed video services, which often includes our managed network. We are seeing more demand for managed services on customer networks or third partner networks, especially as it relates to a Telepresence VNOC, which will be a big part of our growth as we move forward. We have also been growing our managed multipoint bridging business which now represents about 16% of our revenue.

WRB: What effect, if any, has HD had on your business?

MB: The introduction of HD has been a catalyst for us on a number of fronts. We have been focusing on providing alternatives to satellite feeds for the broadcast industry for a number of years. The introduction of HD enabled us to grow this segment of our business by 137% from 2006 to 2007. In addition, we are seeing customers who went down the converged path, and put video on their own networks, come back to us because they say they had a tough enough time supporting video at 384 and 512kps on their networks. With executives demanding the higher quality of HD, they just don't want to deal with it. Customers are looking to us to provide an easy plug in solution as they upgrade to HD.

WRB: What effect if any, has telepresence had on your business?

MB: A big impact! Rather than video getting easier, telepresence is more complicated and truly drives mission critical support of video. This creates a driving force to support managed services and high quality / high bandwidth networks. Suddenly customers, manufacturers and carriers are looking around for someone to manage their telepresence rooms and allow for unique capabilities such as business to business or access to public and private environments. This is everything we have been doing for some time now. The challenges faced with properly executing company-to-company and network-to-network video calling are very evident and put Glowpoint in a perfect position. We launched VNOC services and our Telepresence Exchange Network (TEN) service in response to these demands and are already driving new revenue as a result.

WRB: What is your relationship with Polycom and Cisco in the telepresence world?

MB: We have always been agnostic as it relates to supporting all of the video products on the market and have carried this approach forward as it relates to telepresence. We are supporting Polycom as one of their VNOC providers, positioned by them as a branded offering and have both RPX and TPX Telepresence equipment in our NOC and labs. We have also signed an agreement with Tata Communications to provide a branded VNOC service for Cisco TelePresence rooms. Additionally, we have been working with all the various products including Haivision which is used in both HP Halo and Teliris solutions. I believe it makes us the only service provider with this type of experience across multiple platforms.

WRB: Why would anyone want to do business with Glowpoint when they can do business with more financially sound companies like ATT, Verizon, or even Masergy for that matter?

MB: I think the first thing to point out is you are comparing us to network companies and we don't consider ourselves a network company. We are a managed video services company that happens to be able to also provide the bandwidth using our own network as an option. However, we increasingly are providing our services over other networks including the three you've mentioned here. So we are more focused on partnering with these other companies than being just a competitor. Having said that, Glowpoint has proven to be extremely resilient and dependable on its own since its launch in late 2000. I think it is our unique capabilities and vast experience in providing managed video services to customers in over 1200 cities and 35 countries around the world that gives customers confidence in our service and helps to overshadow any perceived concerns of our stability.

WRB: Ok, so, as the CEO of Glowpoint, what keeps you up at night?

MB: There is a "perfect storm" brewing for the video industry. The components creating this "perfect storm" are the entrance of a powerhouse company into the space, the rising cost of fuel, the globalization of businesses, the slowing economy, global warming, and a change in the demographics of the work force where the culture is comfortable with and expects to use video communications. Glowpoint is right in the middle of this storm and we are rapidly becoming the "go-to" company for manufacturers, carriers and resellers. What keeps me up at night is achieving the right balance of partnerships and opportunities. We manage our business carefully and believe in organic growth, therefore we need to choose our partners wisely. Scaling the business and supporting the demand is a fine balance which we are working hard on every day.

Video: Glowpoint - Telepresence Managed Services

Hugh_McCullen.jpgHugh McCullen - Nortel Multimedia Services

Hugh McCullen is the General Manager of Multimedia Services at Nortel and responsible for strategy, integration, and delivery of service solutions at Nortel.� While the SEC's "Safe Harbor" provisions kept him from either confirming or denying my back o' the napkin estimate of the ultimate value of Nortel's global deal with Deloitte, he was good enough to answer some of my other questions.�

HSL:� So why are organizations like Deloitte with sophisticated IT organizations turning to managed service providers like Nortel to support telepresence?

Hugh: Companies want telepresence and video to be as reliable as voice and secure as data.� They want telepresence to be evolutionary and would like to bring along their legacy video investments in a strategy that ultimately incorporates their plans for voice and data.�

HSL: What are companies looking for in a telepresence managed service provider?

Hugh: They want to reduce the barriers to entry in deploying telepresence and turn a CapEx model into an OpEx model.� They want to replace a budget line item for travel with a budget line item for telepresence.� They want to be tactical with respect to service integration: Scalable, utility-based pricing with minimum technology risk.�

HSL: What is the future for telepresence managed service providers like Nortel?

Hugh: Managed service providers will become the hubs of telepresence community of interest networks (CoINs) and extra-net connections.� Client connections are typically 90/10 Intra-company / Inter-company which we believe will be moving towards 60/40.� The focus for managed service providers will move from "Can you bridge the call?" to "Can you make telepresence and video easy-to-use and intuitive?" with a common scheduling platform for checking inter-company availability and security controls.

Video: Nortel Telepresence Services

Brian Kinne - Iformata Communications

Brian_Kinne.jpgBrian Kinne is one of the charter members of what I refer to as the Telepresence Old Boys Club.� He was a friend and colleague of mine at telepresence pioneer TeleSuite where he was SVP of Sales, he spent time at our arch rival Teliris as SVP of Sales, was President and COO of surgical telepresence solution provider MedPresence, he was EVP of Sales and Marketing at Destiny Conferencing (TeleSuite recapitalized), and after Destiny Conferencing was acquired by Polycom in January of 2007 for $50MM he hung around a year as Senior Director of Business Development.� Now unleashed from his golden handcuffs he has rejoined Iformata Communications (which was spun out of Destiny Conferencing during the Polycom acquisition) as Executive Vice President of Sales and Marketing.� Brian was good enough to catch us up on what is going on at Iformata.

HSL: Who is Iformata Communications and what do you do?

Brian: Iformata is a telepresence and videoconferencing managed service provider that supports a variety of telepresence and videoconferencing systems including systems from Polycom, LifeSize Communications, TANDBERG, and others for some of the best known companies in the world.� We also private label Telepresence Video Network Operation Center (VNOC) services for some of the telepresence and videoconferencing industry's most respected companies.� We design, provision, and manage true QoS network solutions for enterprises and run a telepresence and videoconferencing Community of Interest Network (CoIN) that allows our clients to connect with their vendors, partners, and customers on our network or other networks.

HSL: Why do companies choose Iformata?

Brian:� We make telepresence and videoconferencing easy.� When you buy an airline ticket from New York to San Francisco nobody asks you to fly the plane.� We eliminate technology risk for companies that want to deploy telepresence and make the end-user experience easy enough for even the CEO to use.� Clients place a single call to our (800) number or make a reservation on the web and we handle every aspect of setting up the call and making sure the experience is flawless.� At the appointed time participants simply walk into the room and everything is already connected.�� We pro-actively monitor the equipment in the room to ensure that it is always available and provide a help desk for ad-hoc changes, help with the data collaboration tools, or any other issues where an end-user might require assistance.� We have a superb professional services organization with deep expertise in IP networking, telepresence and videoconferencing that can help organizations interested in building these capabilities internally rapidly bring them on-line.

HSL:� What does the future hold for Iformata?

Brian:� For years Iformata has been hidden behind the scenes providing services for some of the best known service providers in the industry.� Although we will continue to provide private-labeled telepresence and videoconferencing VNOC services we are also going to be re-launching the Iformata brand and sharing our capabilities more directly with enterprises that are looking to deploy telepresence.�

We will be expanding our professional services practice, announcing new partnerships, new customers, and expanding our coverage globally.

While many of our competitors are just learning telepresence technologies and experimenting on their customers, Iformata has been supporting telepresence for over a decade.� We have been in the forefront since the beginning but haven't done a very good job of communicating our capabilities to the market.� Expect that to change.

Video: Iformata Communications

Howard Lichtman's Thoughts and Analysis

Intercompany_Telepresence_2.jpgAs Mike Brandofino mentions in the video overview of Glowpoint, analysts estimate that $3-4 billion dollars will be generated in managed service revenue to support telepresence applications.� Cisco estimates that the total market opportunity (network, endpoints, and managed services) will be $5.5 Billion by 2011. � Maybe this is why telepresence and videoconferencing managed service providers have been in the news lately with BT Conferencing acquiring WireOne Communications in April and Nortel Global Services announcing a deal to provide managed telepresence and videoconferencing services to as many as 130 of Deloitte's member firm locations around the world.� By my back o' the napkin calculations Nortel's Deloitte deal alone could be worth up to $25MM+ a year depending on the final mix of telepresence, traditional videoconferencing end-points, and network connections. More importantly, Deloitte is one of the most important of what I call� telepresence "headends" which should drive additional network connections for Nortel from firms who would benefit from having Deloitte "Right Down the Hall"

Telepresence_Headends.jpg�� �
Telepresence Headends - From Telepresence, Effective Visual Collaboration, and the Future of Global Business at the Speed of Light

As I have written before, deploying telepresence between a couple of locations with no need for multi-point is fairly straightforward, ensure that you have the right amount of QoS bandwidth between locations, architect the LAN correctly, program the call directory, train the staff, and you are off.�

With multiple locations across multiple timezones with the need for multi-point and inter-company video connections the complexities grow exponentially.� You need to purchase, inventory, asset-tag, configure, patch, and support video & network infrastructure components.� You have to provision bandwidth globally - purchasing and configuring network circuits often among multiple providers whose contracts must be negotiated, approved, tracked, and annually reviewed.� You need to staff a 24 x 7 x 365 help desk to handle reservations, technical issues, ad-hoc changes, etc. etc.

So companies turn to managed service providers like Glowpoint, Iformata, Nortel, and WireOne (now BT Conferencing) to handle the complexity and also to connect inter-company calls to vendors, joint venture partners, and customers.�

As Hugh McCullen mentioned in his interview, expect to see the Telepresence Managed Service providers become the hubs of Telepresence Community of Interest Networks (CoINs) providing the infrastructure, network connections, gateways, expertise, and directories to reliably and securely connect inter-company telepresence and video calls.�


Bringing High Definition to your Data Network�� � � � - � � � �
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A free webinar on telepresence for the enterprise led by VoIP News Senior Editorial Director Owen Linderholm and featuring Human Productivity Lab President Howard S. Lichtman, and Hugh McCullen, General Manager of Multimedia Services @ Nortel.

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