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CEO Interview: Michael Brandofino, Chief Executive Officer, Glowpoint Part 1 & 2

December 8, 2008 | Chris Payatagool

Thumbnail image for telepresence_vcinsight.jpg"We reproduce below the Interview of the CEO of Glowpoint with the Editor of Telepresence and Videocnferencing Insight with his permission. www.tpandvc-insght.com"

 

Mike_Brandofino.jpgCEO Interview: Michael Brandofino, Chief Executive Officer, Glowpoint, the company that invented video managed services over IP networks; he has a perceptive vision of the future

Michael Brandofino has a reputation as a visionary of the industry. The vision has been developing since he co-founded Face-to-Face Communications in 1995 and moved on to manage a company that focused on developing IP network connectivity. Then from October 2000 as Glowpoint's Chief Technology Officer, his team was responsible for developing the company's video-centric IP network, its managed video services business model and a number of patented innovations. Michael Brandofino holds a BBA of MIS from Pace University.

He was appointed CEO of Glowpoint in April 2006 with a brief to focus and build the business. The company has seen a broader product offering, improved efficiency and strong revenue growth under his leadership. But it is his vision of the future of visual communications that is important, not only for Glowpoint but for the industry as a whole.  

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Editor: Michael, tell us how Glowpoint was started as a company.

Michael: Glowpoint was founded in 2000 as a Division of Wire One, a videoconferencing systems integrator in the United States. The idea was to create a managed service that made videoconferencing easier to use. Like the cell phone, it is not enough to have the endpoint and the network infrastructure. There has to be a video service that manages the network, call control and user applications. At the time, offering this for video was novel and important because nearly all videoconferencing in 2000 depended on ISDN connections which were often unreliable.

Glowpoint was spun off from Wire One in 2003. The company's aim and main focus was to offer an IP-based video network with unlimited use for a monthly fee, yet also serve customers using ISDN connections on a pay-per-usage basis. This was intended to facilitate greater use of video by making it always-on like the telephone. The Glowpoint always-on charges start at $499 per month per endpoint for a 512K calling speed (a 768K circuit) and are $699 for 1280K calling speed (1.5 M circuit). The 1280K service is ideally suited for the for High Definition videoconferencing which needs a robust network dedicated to video.

We have offered this IP-based service since 2001 and demand has increased rapidly in the last three years - revenues are up 42 percent and our gross margins have improved about 290per cent. We have indicated to our investors that we are very close to achieving operating income positive status and if not for some investments we have made in support of Telepresence VNOC, we likely would have already achieved this earlier this year. However, we feel that those investments have already begun to pay off with our largest sales quarter in Q3 and feel we are positioned to continue growing.

Editor: How big is your customer base?

Michael: Today, Glowpoint supports more than 1,000 customers in over 1,200 cities and 37 countries.  We've successfully grown and retained an impressive range of customers including: Fortune 500 companies; educational institutions; governments on the municipal, state, and Federal level; healthcare providers; business service providers (accountants, lawyers, etc.); and non-profit organizations.

Approximately 600 customers are using our IP-based service and 400 are still using ISDN. There are over 5,500 videoconferencing endpoints connected to our IP service and we now have 80 Telepresence systems under our management.

Editor: How much use do they make of the Glowpoint network?

Michael: We are now handling between 35,000 and 45,000 video calls per month. Most of these are unassisted or as the industry jargon has it "Reservation-less". Approximately 2,000 sessions per month are multipoint bridged calls.

We are able to track the numbers relative to point-to-point and un-assisted since we offer our IP-based users a real phone number and have the ability to meter their usage, even though we do not bill on a call-by-call basis. We also have active monitoring capabilities to every video endpoint connected to the Glowpoint network to ensure we are providing a reliable service.

Editor: I am surprised that you do not have more customers using IP.

Michael: I guess it's kind of an endorsement of the great service that we provide for our ISDN customers. Using our managed service, they don't have to worry about call set up and having a reliable connection throughout the video call. However they are on a pay-per-use basis and this means the more they use videoconferencing, the more they pay. In a sense you could say the ISDN customer is penalized for higher network usage.

It is surprising how many customers still fight the transition to IP, preferring to settle for poor quality and higher expense, simply because they don't want to change. That said, many organizations have not yet upgraded their video equipment and therefore cannot make the switch. We see that changing day by day.

As our IP-based network is based on a flat monthly fee, the more our customers use the network, the higher the ROI they realize. It is a much more cost effective way of managing videoconferences... with our unlimited model, the customer benefits from switching to IP as soon as they hit five hours of video usage per month. Or put it another way, a single call costs up to 60% less on IP than on ISDN.

Even if customers have only an ISDN link to a Glowpoint POP, we can facilitate the rest of their call over our IP network. This is another attractive part of our offering. It's called least cost routing, and our customers see a cost advantage every day utilizing this structure rather than going straight ISDN with no IP network interfacing.

Editor: What are the unique selling points of Glowpoint's managed services?

Michael:
Glowpoint is unique in that we do not focus solely on bandwidth or IP connectivity. We provide a managed service that is designed to be flexible enough so that it can be bundled with a highly reliable IP network service, or independently utilized with other networks as well as private environments. Our customers appreciate both productivity and cost wise, that they can simply outsource their video communications management to us so that they can concentrate on their core business.

As a Glowpoint Managed Video Service subscriber, our customers receive dedicated IP bandwidth connectivity and a suite of videos services, including: unlimited video calling plans, a 10-digit direct dial video number, Reservation-less multi-person video calls, IP-to-ISDN and/or Internet gateway access, Endpoint management, "Lisa" - the automated Video Call Assistant and Reduced rate international calling plans.

These services may be unbundled as well - and purchased without bandwidth, where they get the video services deliver over their own private network environment. We offer our customers a single point of contact - the "VNOC" the Video Network Operating Center - for scheduling and management of video meetings, a dedicated support team, a white-glove concierge service, and web portal scheduling tools. Confirmation notifications are provided to requesters and participants.

VNOC also acts as the single point of technical support through our Help Desk manned 24/7. We evaluate and test video communication equipment of different vendors for reliability and interoperability

We even take it to the next level, helping our customers get the most return from their video communications by offering training sessions and then providing metrics as to how well it is adopted and used within their organization.

Editor: Do you offer global coverage?

Michael:  We service customers with video endpoints located in over 37 countries from 8 POPs in the United States, and others in Australia, Canada and the UK. Our pricing models vary by country; however we can serve any location in the world via our access points, availability and interconnectivity with the telecom carrier community.

Glowpoint is a global provider of managed services and we are working on ensuring it is recognized in this regard.  With the globalization of business and the fact that two of our strategic partners have global sales teams, in 2009, we may be expanding by placing Glowpoint sales development representatives in Asia, India and Europe. We are also in the process of establishing regional VNOC facilities for support personnel to handle call set up and customer support in the local languages as the business warrants it. Our goal is to be global in coverage but localized in service.


Glowpoint_map.jpg

Editor: How do you cooperate with equipment resellers as partners?

Michael: We have two models: 1) the straight reseller model in which our partners resell Glowpoint and receive commissions on the revenue we earn; and 2) partners who want the Glowpoint service to be branded in their name and serve as a wholesaler. These vary depending on how far the partner wants to take the branding and the range of local language services that he needs.

There is a hybrid model as well - for example our partner in Australia, iVision, brands their service as "iVision powered by Glowpoint". But instead of our automated American Lisa video call assistant they get advice spoken by an Australian actress.

Since Glowpoint doen't sell equipment, we are a neutral player and can partner with any major manufacturer or their channel partners as well.

Further, we do not compete with telecom carriers. In fact we prefer partnering with them as several of them are re-branding the Glowpoint service as their own. We have video and A/V equipment resellers as well as Cisco Integrators as partners. It is through these distribution channels that we see substantial growth opportunity for extending our business globally. This model leads to the best possible solution for the end user, such that their equipment provider can offer a complete and comprehensive solution which includes the hardware, managed service and complete support that most customers want.

Editor: How does an interested reader start to become a Glowpoint partner?

Michael: They should e-mail Jonathan Brust, our VP Sales and Marketing at: [email protected]

Editor: Glowpoint has a reputation for supplying high bandwidth requirements.

Michael: Yes that is correct. There has been a misconception that Glowpoint only provided a low end solution. But from the start we have been very flexible in implementing solutions that meet the high demands of live broadcast as well as the day-to-day video conferencing user.  We have been a pioneer in bringing solutions which replace satellite feeds with IP videoconferencing for remote sites at events like the NFL draft and remote home analyst. For the home analysts, Glowpoint provides 2.5 Megabits directly into the sports analysts' home so they may do live interviews from their home. Currently our Broadcast customers primarily use the SONY HG90 HD videoconferencing systems combined with Glowpoint's "white glove" managed services.

Editor: Did this mean Glowpoint was well equipped bandwidth-wise to handle Telepresence for existing and new customers.


Michael:
Absolutely. The Glowpoint service was designed to be easily expanded and we currently are supporting 80 Telepresence rooms with our VNOC offering. In order to support the high demands of Telepresence, we launched a service platform called "TEN", the Telepresence inter-Exchange Network. This was launched in May 2008 and is designed specifically to enable Telepresence users to communicate with any other system on any other network.

TEN is actually a suite of services that combines three key areas. Network to Network inter-connectivity, Applications and Tools, and Operations Services that go beyond normal managed video services.

Telepresence requires significant bandwidth and high quality. A typical immersive Telepresence room requires anywhere from two to six Megabits per second (mbps) per video device, of which there are usually up to four per room Therefore, the total bandwidth required ranges from 6 to 24 Mbps. Multi-point sessions (bridging) requires even more bandwidth, as you must support multiple high bandwidth calls to the bridge and can easily require as much as a DS-3 (45 Mbps) to support one session.  With these requirements it is imperative that the network performance is consistent and monitored, whether the customer is using an overlay network or their own converged network. In addition, customers want to be able to call off of their own network to other businesses (BtoB) and TEN enables this at its very core.

Our managed network solutions independently or through a partner carrier are well-suited to support Telepresence suites. We find that many corporations discover that their own private network (VPN) cannot handle these demanding requirements. They also turn to us because we can seamlessly connect their Telepresence room to a Telepresence system of a different business - a supplier or customer, for example.

Our goal is not necessarily to expand our own network, but to partner with other carriers to enable customers to leverage the network they are currently using to gain access to the video service fabric and enable business to business and network to network video calling, whether it is Telepresence or traditional video conferencing.  We already have a major customer who has all of their systems on Masergy's network, but we provide the managed services and access to the video service fabric.

Editor: How far do you see Telepresence demand growing?

Michael:
I believe if you add the rooms deployed from the four major players, there are about 1000 to 1500 Telepresence rooms out there today with a few thousand more in the proposal stage. But given the economy and the large price tag we may not see a huge uptake in the full immersive rooms in the very near term. However, our experience suggests that when a customer sees the quality and expierence offered by Telepresence, they see the reality that video communications can be viable as a true mission critical tool.  We have seen examples where a customer may purchase five Telepresence rooms, but also add about 50 High Definition videoconferencing systems as well. This ten to one ratio may prove to be a model that makes sense for many businesses. If so, it stands to reason that a truly-managed environment with a service fabric like TEN becomes essential.

Editor: Does your TEN service offering support High definition videoconferencing as well as Telepresence?

Michael:
Yes it does. Indeed this is where a major part of the demand is. Perhaps we should have called TEN our "Glowpoint version 2.0".

We find our customers reserve a 768k or 1.0 Meg connection for their High definition videoconferencing endpoints. They turn to Glowpoint because we can offer them a managed Quality of Service guaranteed connection for each and every HD video call.

Editor: What is your vision of where TEN ("Glowpoint 2.0") is heading.

Michael: Glowpoint is creating an inter-connected video community by arranging connections between any video endpoint (SD, HD or Telepresence) on any network, anywhere in the world.

Users of video from all over the world are contacting us to arrange this connectivity for them. In the words of one of them, we are so vendor neutral that we can be termed the "Carrier" or "Video" DMZ (De-Militarized Zone).

The only carriers who have made attempts to create something like the video community that we have progressed are: BT, AT&T, and Cisco with their service for linking Cisco TelePresence systems of different customers and Masergy's Business Exchange. These are network offerings for individual customers on any given carrier who may support an extranet of sort, but not comprehensive managed video services as we have focused.

We compare our global video community to text messaging and social networks. Every video or Telepresence endpoint registered on and connected to the TEN has a dial-up number and should be able to be linked to any other endpoint connected to TEN , whether they are directly on Glowpoint's network or a partners network who is also connected to TEN. And most important of all, they can be connected with a robust, guaranteed Quality of Service link.

The TEN video community already has 5,500 connected endpoints, but this is small compared to the number of endpoints deployed in the world. Our vision is that it could grow to 100 times this size very fast through partnerships and cooperation amongst carriers and manufacturers. TEN takes video calling close to the ease of use of the normal VoIP voice call. Everyone would be part of a global dialing plan and be able to achieve the same security you do with a phone. You can be unlisted; only receive calls from certain other TEN members or be fully listed. Of course the TEN concept doesn't only apply to corporations, we would anticpate including web based users as well and adding features like "presence" as we progress.

Editor: What would happen if demand for the TEN communities took off and tripled in size in 2009?

Michael: We would scale and exponentially grow. We are well positioned to meet the growth we expect in 2009, but if the demand growth was extraordinary, as it might be, we would solicit strong partners to provide the infrastructure and resources required to scale.

Editor:
Michael, thank you very much for these valuable insights.


[via VCinsight]










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