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TeleSpan's 2013 Conferencing Predications - 18th Annual Event
TeleSpan is a boutique consultancy and publishing firm that follows all the major flavors of conferencing (video, audio, and web). The firm is headed up by Elliot Gold who has been making predications on the state of the industry for 18 years including which companies will "hit the wall" or be picked up in acquisitions in the next 24-36 months. Gold has had unparalleled accuracy in making predictions. Since 1996, Gold has made 170 predictions (10 each year) with a running accuracy score of 75% (127 accurate predictions out of 170). This achievement gives him perhaps the highest batting average in the industry (other analyst groups and Wall Street firms typically have accuracies well below 50%). As a result, many analysts on Wall Street have considered TeleSpan "the authoritative source in teleconferencing" for more than 30 years. In this year's predictions event, Gold was joined by visual collaboration executive, industry veteran, and pundit at-large J.D. Vaughn, who is well known in the collaboration industry for his hard hitting and "spot on" analysis. This year's event features predications on collaboration industry players including: Polycom, Vidyo, SMART Technologies, and industry trends including WebRTC, social media, digital natives, mobility, iPad videoconferencing, free conference calls, and call recording and indexing.
Elliot's predictions will be discussed and debated at TeleSpan's Eighth Annual Future of Conferencing Workshop in Las Vegas, NV on March 7th & 8th at the Palace Station Hotel & Casino.
This event was sponsored by Arkadin Collaboration Services. Information at http://www.arkadin.com/sg
Welcome to the TeleSpan's 18th Annual Predictions Event Conference Call. I would now like to turn the call over to Elliot Gold and JD Vaughn. Please go ahead.
Elliot Gold: Thank you, Trish. And JD, welcome to the call. I want you to remember that it is only I in the industry who refer to you as "Mr. Know-It-All".
JD: Thank you.
JD: Well, there are others that call me "Mr. Know-It-All" but you're the guy that started it all.
EG: Oh, well, I'm gonna talk to the IRS and make sure that you...
JD3: They already know my bookkeeper. Don't remind them though. Alright...
EG2: Alright, we'll...
JD: There's 18 of these, right? You've got...
EG: Yeah, I know. Can you believe this?
JD: Yeah, I can 'cause you're still using the same slides.
EG: I know, I know. And, you know, they're still great. This is my 18th year of using these and, you know, I tried to use my Kodak slide projector but it just can't work fine. And I had to go to PowerPoint. But what the heck, I have to be consistent.
JD: Well, you're not being exactly consistent.
EG: Oh, I know. Well, anyway, we've been doing this for a long time and I'm very proud of my accuracy rate. I have no idea why we're so accurate. You see that we're 75% accurate but who knows? Maybe because I have been in the industry for 33 years. Actually, even longer, but we'll just go to 33 years. But what we're gonna do is this, JD and I are gonna talk about the predictions but more than that, we're gonna have fun. We're gonna have fun, right, JD?
JD: I'm going to. I don't care what you do but I'm gonna have some fun.
EG: Alright, okay. But listen people, we want you to challenge us. If there is a prediction or a comment that you want us to make, please bring that up to the text chat. JD will be monitoring that. I understand there will be no audio questions because in the last few years nobody asked any audio questions. So, we're gonna go strictly text, you get your questions in and I want you to get those questions to us in time. Special thanks to Arkadin for hosting this, this is the second year. Actually, they have really been around for a long time and I'm so glad that they are doing this.
EG: As I said, we're gonna go back and forth. But the first thing is that JD and I are gonna be talking about the predictions for this year. Then, I'll open it up to questions and JD will have them queued up. And then, if there's time and I hope there will be, we'll go through the scorecard for how I did in 2012. So, a drum roll, JD...
EG: All right, Prediction Number One, Polycom goes private or is bought. Now look, you folks have been reading the newsletter, know I've been talking about this for some time. And then in November, there was this very strange filing by Polycom with the Securities and Exchange, it was an 8-K. And I won't go through all the details but it was a Board change and it was just all sorts of things. I ran it by my attorney and he said, "My wild guess is there is turmoil and possibly, an unfriendly takeover in process." Now, I am weighing in on them going private or maybe being bought. Now, you are about to hear from JD.
EG: Wait, wait, wait, wait. JD! Wait, wait, wait. The sense, remember, I had... [chuckle] Anyway, JD doesn't agree with me where I speculated IBM. And it's a long story but... Go ahead.
JD: No, no, come on. Come on. IBM got out of the declining hardware business. It was hard for them that they've shed off their PC, they finally got it to Lenovo. They are not gonna get back in the declining hardware business which is exactly what Polycom still is. Regardless of the press releases, they are still in the hardware business. And even though they have announced way early "We're in the software business," just saying it doesn't make you so. So, I don't think IBM's gonna buy them. They may go private though which would be a smart move.
EG: Yeah, well, we're gonna see. And then, in the newsletter, when you guys get it, you'll see where my justification is. And because I'm saying that, before JD gets to comment again, I am gonna go, "Oop! Aahh!" Prediction Number Two, sales of software-based groups video conferencing passes the hardware-based, and Polycom's gonna fall behind Vidyo. Look, again, I put this in the newsletter, I was watching the Big Six figures. And last year, first, I reported an 11% drop in the hardware sales, quarter-to-quarter. And then I looked back and found out it was the second quarter in a row. Actually, there have been three quarters of decreased sales of the Big Six and therefore, the whole industry, in group video. At the same time, I peeled back the onion and looked at Vidyo's releases and they grew 80% revenue-wide and they continue to grow. Now, yes, they're smaller but you know what? JD, we know this! It's not hardware-based anymore, it's software. Go ahead.
JD: It is software-based. But that doesn't change... What has happened to the inside that just the way video-conferencing works is different now. But we still have wide screens, we have immersive rooms, we still have... I mean we're still seeing companies like AVI SPO and IVCi and others, really into the immersive environment. They're still doing that but we're doing them with software-based codecs. There were probably 12 to 15 new companies announced last year. And there're three companies but right now, Vidyo is leading and I am gonna agree with this Prediction Number Two.
EG: Okay. Alright. By the way, a real quick question came online. Dave mentioned "Yes, it was revenue. I totally agree", and we can talk about that during the Q&A, right, when we're talking about Vidyo's growth, I agree. Number Three, business callers use WebRTC endpoints for 25% of their calls by 2016. Now look, if you are alive today, breathing, eating, have a heartbeat... Did I get all the things that are covered for people who are human beings, JD?
EG: I hope I did. Okay, yes. And you don't know WebRTC...
JD: No, no, no, no, well, just a second now.
EG: Oh, okay.
JD: And for the VCIG Live folks that are attending the session next month, the 21st February, VCIG Live will deliver a WebRTC overview. If you don't know about it, and I'm surprised a number of people don't, here's the deal... WebRTC is going to do to video what smartphones did to cellular. So, if you're not all over this technology, and how it will impact, this is one of the ways we're gonna go from, what are we at, 30 million endpoints now, Elliot?
EG: Something like that.
JD: This is gonna go from 30 million to 20 billion.
EG: Yeah, it's amazing. This is a software that runs on the Google Chrome web browsing but it also runs on... Or rather, Firefox and Safari. When you put them all together, that's 53% of the desktops around the world. And when I'm talking about 25% of the calls are gonna be using this as a endpoint, when I was at the WebRTC conference at the end of November last year, Blue Jeans Network interrupted and said, "You know what? Already, 35% of the video connections that we bring in, that we bridge, are coming in from browser-based endpoints, three-five." And I'm talking about 25%, JD! People are gonna go to the browser-based endpoint. We're gonna see that.
JD: Okay. Here's the beauty of this too. Because it's browser-based, now even CFOs, CEOs, and other executives can use video conferencing and get the specific parts out of it. It is now going to be easy to... So, and security is built in, as well. We're also gonna see a shift from consumer-based free kind of offerings like Skype over to WebRTC. And you mentioning Blue Jeans at the WebRTC conference, Vidtel won the award for the best WebRTC Deployment. So, I hope those folks are right in the middle of it.
EG: Oh yeah, absolutely. Let's go to Number Four. You know, I always talk about this and as you know, Shirlee and I raised kids, teens and now, they're well into adulthood. So, we've been watching this but this is kind of new. Teens are gonna grow up and bring video chat into the office, into the workforce and they're gonna bring it in as apps. Now, let me give you a number that is truly amazing, okay? Pew Research reported that 40%, four-zero percent of teens, 12-17, are already using video chat. These are the very people, JD. They're gonna grow up and come into the offices. They're gonna look at these dedicated things, "You want me to do what? I can already do video. I'm gonna do it now. I use it all the time." This is gonna grow the market.
JD: Well, absolutely. And we're all bumping up against the BYOD issue, "Bring Your Own Device", bring your own everything. I mean new employees, digital natives, people used to using apps, and they've grown very close to their apps into their smartphones and tablets, they expect to be able to use these tools at work, too. And if you're an employer and you don't help build facilitate that, don't expect to capture some of the brightest and boldest new employees.
EG: Yeah. A very, very good point. You're right. Number Five, mobile and VoIP. Primarily, well it's really... Well, it's both, okay, are gonna be seven-zero, 70% of conference calls by 2015. Look, if you think about this, when you're on a call today, and certainly, JD and I are very good examples, okay? When people come into conference calls today, they're busy. They're mobile. They're moving around. They're between meetings. A lot of times, they're at the airport, and so forth, or they're in their car. Oh gosh, California, whoops! Anyway...
JD: I just got a question. It says, "The limitation for mobile is the screen size and audio." That was a nice question but it's trumped by mobility, you dumb-dumb. Mobility trumps it all. Hello? That explains immersive rooms. But you're absolutely right. 70% of all the calls... I will absolutely jump on board with this prediction.
EG: Okay, oh, I'm gonna go to the next one then. JD agreed with this one, wow!
JD: I did.
EG: Number Six, six is my lucky number by the way, iPad and other tablet-based video systems are gonna surpass the traditional executive desktop videoconferencing systems by 2015.
JD: In terms of the numbers, I agree with you, absolutely. But by no means does that mean the size of that market is gonna decline. It's just not gonna grow as rapidly as the rest of it. I mean it's a big jump to go from 25 or 30 million to 26 billion endpoints, most of those being iPad and other mobility-based devices. But it doesn't mean, and I'm seeing this... Continue to see this grow from the immersive rooms as well. So, I think it's good news all the way around.
EG: Oh, yeah, no, no, no. I mean, we're gonna see these people come in and use this. Look, here's something... You talked about digital natives, I believe you said that ... I did mention that. You remember we were at the workshop last year, Dr. Hansen talked about digital natives and he's gonna be there again this year at the workshop in March 7th and 8th in Vegas. And I found this data from Common Sense Media, listen to this. Think about a two to four year old kid, a baby, 39% of children, two to four years old, have already used iPads or iPhones. 52% of the kids, five to eight years old have been using this. JD, they see all these apps, and they wanna talk to grandma, oh, it's no problem, you move this, blah, blah, blah. You are right, it's a new market, it's a growing market.
JD: But let's be clear, but let's be clear. It's a fast growing market, but Mike Brandafino has made a point here in his question. Have you ever tried to do a video call holding an iPad? Good for one-on-ones, but not so great for business meetings. And he's right.
EG: Totally, but remember what I said was "executive". No, no, no, no. I totally agree, this is for executive endpoints. This is for one-to-one, even though on the screen I show one-to-many. But no, no, no, I agree with Michael.
JD: Well, we don't usually use it as exclusive, by the way.
EG: Yeah, and by the way, JD, don't forget, since I just said, "I agree with Michael Brandafino... ", that... [laughter]
JD: Okay. Hey, hey, You didn't choose the Italiano, what are you gonna do? You're gonna give him, right? "How you doing, Mike? How you doing?"
EG: There you go. Number seven, oh, this was a tough one, this is tough. The free conference calls peak as the percentage of the North American market, they have peaked. But I think they're gonna start to fall with the loss of the rural phone revenue sharing. If you've been to the workshop, the Telespan Future of Conferencing Workshop for the past eight years, seven years. This is the eighth, you know that we've been talking about the free conference calls, and the ability for these companies, literally, all around the country, even around the world, who work with the rural telephone companies using revenue sharing to get their money, even though it's free, they get money. Well, it turns up the FCC said, "No, no, no, we're not gonna let you do that anymore, no more of this revenue sharing." And that's coming to kaput! To nada. And I'm afraid that these people who were charging nothing aren't gonna have any revenue. So, if they are not gonna get it from the phone companies, so...
JD: So, wait, are you saying we're gonna be flushed out of nothing?
EG: I like that, that's kind of a bread, that is very good...
JD: Yeah. I agree with you, I agree with you but I think there are some people that are gonna fight this. They're gonna fight it legally. They are gonna go kicking and screaming because this does drive a number of large conferencing companies that are in North America. So, I agree with you, while the FCC is making a decision and pushing on that, and the end of this year, 2013, I expect we'll see some interventions and political maneuvers to try to extend it as well.
EG: Yeah, well, it turns out that some of the smart free conference people have been able to team with phone companies outside of the US.
EG: And so, and they're being very creative with lots of their offerings here, but we're seeing it, yes. But I'm afraid, we went from 8% to, I think it was almost 13% of the North American market with these free calls. And that was pretty good for over a period of three years, but now it's in the decline. Okay, Number Eight. Tough one, I don't usually do this but I'm going to. A lot of you are aware that there is a class action suit against SMART Technologies, really the innovator of smart-boards, of these boards that we are so used to using in large conference rooms in a distance ed market. And the suit alleges that the founders and the company, in general, knew that there was gonna be a shortfall on revenues when they filed their initial public offering. Swift note, they filed an offering, it raised $660 million and all of the sudden, sales started going down. I know the two founders, they are good people and I just can't believe that they would have allowed this to happen, not all of it, knowingly, so, I think Dave and Nancy are going to win in this case, but I know, JD, it's a tough one.
JD: Well, when you say, "Win", I agree with you. And I think they really are good people, but there's really no winner in this thing because you gotta fight it. And when you fight it, it takes your eyes off the ball. You can't pay attention to the business itself, you're dealing with this. So, I wish them all the best, but I know it's difficult and I agree with you, they're quality people, they've done the right things. And they are not the only ones in this tipsy-topsy-turvy market since 2009 that's been ifs and buts. So, good luck to them.
EG: Yeah, it's interesting. I wish we could talk about Facebook, but you know what would happen then.
EG: Let's go ahead. Number Nine? Yes, at Number Nine. Number Nine, call recording and call indexing becomes the most popular feature by 2016. If you've been watching, we're in free-fall in conference calls and voice conference calls. That is that, that price per minute has just dropped down to a point where we almost have to pay people to get on the calls.
EG: There we go. Anyway, so what happened is a lot of people...
EG: I don't know where that's coming from. But we're hearing some noise, maybe that's call recording in to it. Somebody's getting that. Anyway, we'll have the operator mute that line in a second. But what we found is that with this hypervoice, you can go and record an entire conference call and fully index it so that when I say you... Notice how I'm doing this, JD... When I tell JD he has to do something, it'll be there as an action item. I never take any responsibility for any work 'cause I know that others on the call will do it. But seriously, this call indexing and recording is very clever that we're gonna see it as a major feature. And it's gonna add value and revenue and the profits are gonna return, I believe. We're gonna talk about this at the workshop.
JD: Well, it's just... It's one of the applications that we're seeing more and more of the sophistication of unique applications that can help drive revenues. And the successful CSPs, conferencing companies are finding these applications and making them available. I know that indexing and recording has become part and parcel of the Vidtel roadmap. I know other folks have other kinds of offerings, and we're seeing them come out of the vertical markets too. So, while we're looking at this and saying, "This is a horizontal application", we're seeing a lot more of these kinds of revenue-generating activities coming out as a vertical app as opposed to a horizontal app. We're seeing just a plethora of them. There must be 35 to 40 new companies in the last 18 months with unique applications that apply to collaborations.
EG: Yeah. What they're doing is... You've used the right word, they're going after the applications, not the technology. They should have been doing for a long time, but this is a great app. Okay, Number 10. Well, this is kind of a follow on, but what I said earlier, but I do wanna give some numbers here and that is that I think that group... Remember, I'm talking about group video conferencing, hardware-based video conferencing systems are gonna fall below 25,000 units per quarter by 2015. Let me explain. We've been collecting these numbers for literally, decades, and we peaked globally in group video conferencing, hardware-based endpoints last year, actually in 2011, between 50 and 57,000 units a quarter depending on how you count off the Big Six versus the whole global community. And then, we saw two quarters in a row, as they said, of drops when I was talking about the Polycom prediction, 10%, 11%. We're going down, the hardware-based, and I think we're gonna go below 25,000 units a quarter. JD.
JD: Yes, Elliott. I'm thinking there might be new chains of counting we need to be doing because if we said, for example, when you look at this and you see the arrow go down, you say the industry is going down. And then I talk to Brandafino or Bob Swing or Von , the folks that are putting in these immersive rooms using soft codecs, maybe we need to be counting monitors and rooms, and groups differently because with the hardware codec, there's no indication of the growth still in the industry.
EG: Oh, oh, oh, oh, okay. Wait a minute. I want the operator to delete this next part 'cause I'm going to agree with JD. I agree with JD, I don't know where that came from.
JD: No, you're absolutely right. I'm not saying that the use of video conferencing for groups is gonna go down. I'm just saying that the dedicated stand-alone hardware sales...
JD: Well, it's kind of the next thing is... How about this? It's kind of like saying, you think that the sale of CDs has gone down? Absolutely, because we have other technology to replace it much more effectively.
EG: Yeah, yeah, yeah. Absolutely, absolutely. But I still have my analog page, as everyone knows.
JD: Of course you do. Anybody that uses the same slides for 18 years is bound and determined to have an analog page.
EG I knew you would bring that up! Gosh, JD. I'm counting now. That's 17 times!
JD: Well, I'm only hoping one of these days, you'll change the damn slides, Elliot. But that's okay.
EG: Oh, I don't know. I'll try.
JD: I love you.
EG: All right. Let's see, we're doing fine, actually, time-wise. My God, this is unusual. I must be talking fast. Everyone wants to slow down, JD. If that's...
EG: Any questions or comments that you see there that we should address?
JD: I don't wear a dress anymore. What do you mean?
EG: Oh, you don't wear a dress?
EG: I switched myself when I...
JD: Well, I got one question here, Tim . Tim tells me to go easy on the New Jersey Italianos. Okay, Tim, we'll lighten up a little bit. [chuckle] Elliot, one question. Somebody agreed with us already about... He said, "Of course, JD is right, IBM will not acquire Polycom." And so, of course, that's a very intelligent question and making... We have one comment, BYOD limitation in screen size and audio. It's not an either/or guy. The screen size is small. Brandafino is right, it's not good for meetings, but I'll tell you what, sometimes, mobility trumps screen size and audio. And that's what we're seeing. The bulk of this growth from 26, 30 million to 20 billion is gonna be this magnitude of endpoints. So, that's what we're seeing.
EG: The other thing, JD, is, in the slide I showed, and I can go back to it, when you have the tablets there, you just connect the display out to a large plasma display, you can go buy at Fry's for nothing now. And so, you don't have to hold it. It's just that the camera's there and you put one of these little plastic things that holds it up and suspends it, so Michael and I don't have to worry about it. Shirley's teaching me how to use these things but, yeah, the displays and the audio is all easy to do. It's just that that's gonna be the endpoint that's gonna come in, I think.
JD: Well, there's some other questions here. One from James, "I'm curious on the status of large screens, smart TV's being capable of running browsers like Chrome or WebRTC." Of course, I mean, high-definition, smart televisions will look a great deal like smart tablets, so they will be able to download WebRTC or it's not a download, it's just a connection. A question coming from Jim Ford in Denver, "Do you think Polycom would be open to a private equity buy out?"
EG: Yes, interesting. Interesting.
JD: Let the Brandafino, he says...
EG: Wait, wait, wait... Hang on a sec. Something is clearly going on. We can't figure that out. Nobody on the inside is talking to us, and even people who left the company don't seem to know, but something is going on. So, yes, that is possible. Go ahead, JD.
JD: Well, yeah... I mean somebody that did talk two or three years ago got in trouble over here at Polycom. So, you now, there's no talking going on now. So, Brandafino is prolific. I think we will see the emergence of shared codecs where we have centrally-located codecs serving multiple rooms, where prior this is a customer thing. Hey, that's kind of cool. So, you got one codec in multiple rooms.
EG: Yeah. In the Cloud.
JD: Well, yeah, the local Cloud. I kinda like that. From Ken Hall, "Are the legacy video hardware manufacturers going down the path of Wang?"
EG: Oh, that is interesting. My God. I used to track all those numbers of what happened with Wang.
JD: Well, remember what the former president of the Digital Equipment once said? "Why would anybody want a personal computer?"
EG: No idea, no.
JD: The famous last words.
EG: Yeah, I know. I know.
JD: From Mike Monroe, "What about hosted cloud-based PC, managed MCUs?" Well, what about them? Of course, Mike, I mean we're seeing that all over. Intel's just growing leaps and downs. Blue Jeans Networks, so we're seeing this Cloud services... In fact, think about this for moment, how in the world can you go from 26, 30 million endpoints to 20 billion endpoints and try to keep up adding ports on hardware MCUs? That doesn't scale, man. It's gotta get from here to there. So, it's got to be in the Cloud. Absolutely. Okay. From Chris, "Files forced over to, over to... "
JD: ClearOne. Yeah. The information is the number of rooms that will be used for dedicated conferencing today versus the number of rooms in 2015. Yes, but you've got to attend the Future of Conferencing in March to get those.
EG: That's right. I like that. I like that.
JD: Chris, we'll be in Las Vegas. And I do know you, you do not like gaming and you do not like the environment there. You'll see if I will show up, I'm teasing. Of course, you'll end up there. Okay. "Manufacturers from on the GBH. Manufacturers aside, what are the emerging opportunities for bars from a service perspective?" Well, how about Cloud-based services like reselling Cloud-based MCUs, anything you need, recording capabilities. There are hundreds of new Cloud-based services and a lot will be focused on that. So, any thoughts you got, Elliot?
EG: No, I totally agree. It's like the difference between the Wintel systems and the Apple. When you have an Apple device, everything that you buy from Apple is connected in the Cloud. I can't remember what they call it, iApple or whatever it is. But to think that they went ahead and just said, "We'll put your calendar there. We'll do everything." So, there are all sorts of applications that will emerge, which will go that way. And I think, the way you find out, is you simply sit down with your customers and ask them, what do they feel isn't working? What are they trying to do? And then, you go, get some teenager who between performing what they do in Zip's cartoons everyday, does the app in about 30 minutes for you.
JD: Well, we're seeing trends certainly, more and more trends around applications, vertical applications, and my recommendation has been to over the years, and innovators, begin to partner with vertical specialists in key areas, and we know what those are. Some key applications in the field of Medicine, Distance Learning, Legal, begin to partner with those folks in those vertical spaces, and you'll watch that part of your business grow. Okay, "Is there any data on the growth of Cloud-based services to support that?" Of course, there is, Von, and you've got to attend the thing in the Future of Conferencing in Las Vegas in March to get those numbers. But yes, we do have those numbers. Cloud-based growth, those are available, a number of white papers. And you said that you got it, JD? Well, the thing about, we don't need a sign up slip. We'll call him, okay?
EG: By the way, we're going to talk about telemed. We're surely gonna be talking about that. And Tony Alonzo is gonna be there from BCIG and from company, and we're seeing so much growth and so much opportunity in telemedicine. There's unbelievable applications which you can sense from a distance of people.
JD: Well, the FCC is socializing that, that means they'll do that as well now. So, we're seeing some companies
EG: Was it 180 million or 500 million?
JD: Yeah, yeah. Greg McArthur has got some data on that. He follows the industry. He does some financial analysis. But he's been really poking at that, I mean, that championing some smaller telemedicine projects. If you're not attending the ATA, American Telemedicine Association meetings, you're really missing it, you really are missing. Get signed up for those. Okay, any other questions. I'm gonna look here.
EG: Let's take one more and then let's go on to the second half and then, we'll catch up with more questions.
JD: Okay. The question is, "Why does it appear that JD has more hair than Elliot?" Well, because I do.
EG You do? Did you put that question in, JD?
JD: I did, I did. Steve Augustino, is he at the FCC Subsidy? He's gonna talk about that at the workshop. So...
EG: That's great.
JD: Tell them to learn about the subsidy... And we'll also probably dovetail on and how to take advantage of the funds allocated to the FCC on those areas.
EG: Yes. Yeah. Steve has been doing that for years and yes, I forgot. Please, you need to come to that panel 'cause he's gonna talk about that. It's something very important for our industry.
JD: So, we got Augustino. We got Brandafino. We got... How many Italians you got in this?
JD: All right.
EG: I'm going to the next slide.
EG: All right, let's talk about how we did last year, all right? My Prediction Number One was that Skype video calls surpass hardware-based video calls by 2014. I'm taking thumbs up. Why?
JD: Go ahead.
EG: Well, it's very interesting. If you take a look at the numbers that were available just for 2011 from Skype, they did 300 billion minutes of Skype-to-Skype and Skype-out calls, 50% of which were video calls. That's 150 billion minutes. That's way more than we're seeing in business now. I think we're gonna get business to go much better than that. But right now, we had 70 billion audio minutes in 2012 versus 150 billion video of the Skype minutes. And then, you take a look at the CSPs who are doing the video in North America. They're not to anywhere near that. 150 billions of minutes is way larger than what the video providers are doing today, you know, the business through the hardware.
JD: I agree with this and you were right, let's be clear. Okay. A lot of business users don't like consumer-quality video even though it's free. Free doesn't count for everything, even for guys like you. I know free is the best thing you've ever heard. However, there are many people who like higher quality. And let's go back to the WebRTC thing. Absolutely, that deployment will help increase the quality, security, and I think even seeing in the business face, we had this Skype video surpass hardware-based... I would say, Skype video declines in relation to WebRTC for business-based videoconferencing in 2014 and 15.
EG: Well, look. WebRTC was the weighing of the world, in a sense. They got the concept out there and now everybody's figuring it out. I totally agree with you. The WebRTC is the way we're gonna go. Browser-based video conferencing is going to rule because it rocks. And...
JD: There you go.
EG: I'm just pointing out to the numbers, then I'll have the full numbers on our newsletter. So, let's go to Number Two. I gotta take this one sideways because when I said was that Google would take on Skype, Microsoft with the free video calls and it would overtake Skype, but I just don't have the numbers yet and I said I would do that... It would happen in two years, so I'm gonna take the sideways system. I got one more here but Google is trying to take them on, but.
JD: It looks like.
EG: We'll take one more year. Let's go to Number Three. Oh, well. [laughter] I know, JD, you were all over me on this one last year. I said that Cisco or Polygon would buy Vidyo, and he said, "I would never stand for that." We won't mention his name. It didn't happen.
JD: No and I suspect that Vidyo would pass Polycom.
EG: Oh, yeah.
JD: And I suspect, there are rumors that Cisco wants to get out of the hardware videoconferencing business period. They may just spin it off who knows.
EG: I know, I know, I know. Interesting. Yeah, we can talk about that, there's... You're making it a right size but from Logitech but the... I know, they'd be very interesting. Let's go to Number Four. American Capital sells reconference.com to a major CST. It didn't happen.
JD: Right at them.
EG: I know, I know.
JD: Right at them.
EG: Yes, I know. We gotta be careful here. We're both in the same situation. So, for the record, what JD and I are saying is that it did not happen. I think we're both right in that sense, JD.
JD: But I will say this, I will say this. Any private equity firm that owns an audio conferencing company today is trying to get out of it. So, we're gonna see more and more consolidation, more and more consolidation for new, old... All the players. And consolidation, we're seeing too, for example, the consolidation where we're rolling up the, our integration companies and the IT companies, IT integration companies. So, I think we're gonna see, well, this is... Well, it didn't happen. The movement and the trend toward consolidation will continue to happen and grow in 2013 and '14.
EG: Yep, yep. Yeah, there's something going on there but we're just gonna switch slides, okay? Number Five, collaboration grows as part of social networking. Take a look at Facebook, adding video conferencing and virtually any social networking service that you use today has a collaboration on it. Now, it's just, that's the way it is. You don't just network, you collaborate and so, I'm taking a thumbs up on this.
JD: [laughter] I keep thinking of people going to a pub and staring at their iPads or their phones or going to the beach and thinking, "What's happening? What's happening?"
EG: I know, it's so amazing, JD, even when we have our family dinners here at the house. Shirley and I have the boys over and then their lady friends, everybody's got their smartphone out. We even text to each other and network with each other while we're eating.
JD: The other day I have a house guest and so, I texted her up in the guest bedroom, "Would you like coffee?" She said "Yes, could you bring it up?"
EG: All right, oh, God. Well, we have to use our mouth and ears, or maybe... Number Six. Arkadin becomes one of the top five CSPs in audio. Actually, what happens is last year, Arkadin, with their acquisition, was able to get into the top six. And yet, when you take a look at how fast they're growing, I'll break it out of the newsletter, I don't show the figures 'cause Arkadin is not public, but with the data that I've been collecting, they will definitely be in the top five very quickly.
JD So, and because they are French, "Oui, oui, I'm so glad... " So, Eric Murphy says, "A pub and iPad, what's wrong with that?"
EG: I can't think of anything, let's go! What are we doing on this call, JD? We could be in a pub doing this.
JD I tell you what, these Arkadin folks are really fun to work with, too. They're good people.
EG: They are, they are. Number Seven. Logitech goes deeper into the living room. I don't... In fact, I forgot, I even publicized this myself and I kinda caught it a couple days ago. Logitech introduced yet another product last August to expand their presence in the living room. It's called a "TV Cam HD". For $199 smackeroos you can take your flat screen or whatever you want to call it TV and turn it into a video conferencing system. In the newsletter, we're gonna have a link to a video, so you can see it in use. It's amazing! They're just going there. "JD, you wanna be in a pub?" "I don't mind being in a pub but there are some times I wanna sit in my living room and be on a conference with you."
EG: Well, to smart televisions, too. We're gonna see more and more of the market share, the monitors, these smart televisions, which will encompass all these features and apps, and they will go to the Cloud and pull the app down that's needed for the family or the business who can work at home. I see Logitech coming at it with separate peripherals, I see Vizio and others developing, Sony, Samsung, more and more smart televisions. So, if we can get IT TV, IT connectivity on television, we're gonna see more and more apps pulling these together and it could be pretty powerful, not only for living rooms but smart monitors, I think, we're gonna find them in more and more businesses, as well.
EG: By the way, I've seen some questions on the side there about the other 30% of the voice conference calls. I wanna make sure you folks know what I was talking about earlier in my presentation when I talked about 70% being from mobile endpoints and voice endpoints. What I'm saying is that 30% of the voice conference call endpoints will remain straight TDM over the ordinary PSGN public network. The reason I'm saying that is you have to remember, we still actually have rotary phones, rotary dial phones. What happens is, the market expands with the new endpoints, but the other endpoints are still there and people will call in using ordinary telephones to conference calls. That's what the other 30% is. It's not gonna disappear. JD, we're talking about that, about all endpoints video and audio. Sorry to interrupt.
JD: That's okay.
EG: All right, Number Eight. Polycom enters the consumer space and falls.
EG: You can hear it already. Okay, now wait a minute, wait, wait, wait, wait, wait, you can hear from JD the emotionless response. Yes, yes, that he doesn't agree, in a sense, doesn't agree. What I'm doing is taking sideways but, gosh, JD, they had all those announcements, "Whoop dee do, rah rah rah!" Cheerleaders all over the place. And where are the products?
JD: Well, there's still overhanging the market. Man, they're out there, they're trying to stop the bleeding. It's triage. I mean they're in the business for every time that a software solution gets sold, their hardware stuff doesn't get sold. And even if they win, they win it 1/3rd, 1/20th the revenue in their profits. So, they gotta get out of that model. So, they've had to announce, quickly announce, they overhang the market. So, when you get to seeing Polycom, one of the questions you need to ask when you're meeting with Polycom people, "Where is it? When is it?" and "What will it really do?" And by the way, they're not only ones guilty of that, they're not the only ones guilty of that. I mean anytime you're in the marketplace where you gotta stop the bleeding and make a change, you're gonna see this kind of dancing happen.
EG: Yeah, well when it comes to consumer products, how many consumers are gonna be calling a Polycom reseller versus going in a store?
JD: You think?
EG Well, I'm not.
JD: I'm not certain, consumer, as a way, in my mind, I don't know about our audience, but consumer means less quality, less security, all of that and I think... And I hate WebRTC drawn but it deals with security, it deals with quality, with years of experience, all of those kinds of things. So, we see less and less of a discussion about consumer and business grade, and I think business grade, people just are not going to use it anymore.
EG: Yeah. I know, that's a good point. You were talking about smartphones, in the beginning, those were seen as consumer products and they certainly are not now.
EG: People just... I totally agree with you. It's just, what I like is that these large manufacturers are able to take this quality and if they're gonna be able to put it in, and you are correct. What I'd really do love is that WebRTC being on all those browsers and being on all those endpoints. And we're gonna see it very soon.
JD: And by the way, Elliot, you're attending the panel, we're doing a WebRTC next month, on the 21st, aren't you?
EG: Yup, yes, yes.
JD: Good. So, we'll get more in-depth about this at that live event and then, again at the Future of Conferencing in March.
EG: Yeah, because we're really heavily looking at that, we have to go there. All right. Number Nine, Number Nine, conference calls go to video, added for free but not used. And the reason I took us sideways here is, even though there were vendors who went and bundled these services with what they call "UC services and offerings", I just don't have the numbers, I just don't have the numbers. So, I don't know how we did on the conference calls adding the video, I just don't know. JD do you have any idea? I mean...
JD: I'm not even sure we could track it anymore because it's so easy to... And so many applications to go from video, from audio back to video. So, I would say this, that we start tracking video-capable calls and then that's probably only a week, we'll be able to track it moving forward.
EG: Yeah, yeah. You're right. Okay. Number Ten, and this is what we were just talking about, one to three... Oh, wait a minute, wait a minute... [laughter] Oh, he knows where I'm going. All right, I will read the script that JD gave me. [laughter] "JD Vaughn is the one who predicted this last year. End of sentence." I added the "end of sentence", that wasn't in the original quote.
JD: Now, let me add this though, and while this did happen, and we got it right and then we parted on this. Here's what we're discovering, Unified Communications is not getting attraction in the marketplace we thought, folks. In fact, all of the applications that we built, thinking we solved the problem and not, are infraction, all the free offerings, all of that. Well, one in three companies have announced Unified Communications, I would say that all three would say, "The fraction is not as rapid as they would like it to be." Maybe unified communication with a solution in search of a problem.
EG: Yeah. But you know that always happens, these products are introduced and I can never remember the sentence, Martin Nelton is on the line, he's the expert on this, and how long it takes for new technologies and new services to take hold and then, they take hold... It takes much longer than we expected but then when they do, they take a bigger piece of the market than we even forecast, even with our wildest forecast.
JD: I agree with that. I agree with that. It's just that whether it be your stakeholders, your employees, your investors, when you anticipate the growth and the revenues to be there in 24 months and they don't occur, you've got to go then spending your time, raising more money to buy you more time, 'till the market does, you do get market attraction. And lots of times, you're gonna be distracted for awhile. Reorganizations risk, and a lot of that. If you don't divide the revenues, you commit to the marketplace you're gonna drive into your stakeholders then you're gotta go do something else.
EG: That's true. Well, okay, let's go... Actually, I was gonna talk about questions, let me hold this on the screen so people do see it.
JD: I'm looking from... Where am I, where am I? Oh, there he is, okay. Well, I look good.
EG: I wish I could...
JD: I look good, huh.
EG: Yeah. You know what? That's amazing. That's stuff I'm talking with [46:48] ____.
JD: Yeah. It's all great. Okay, we've got some questions, if you wanna do questions now?
EG: Please. Let's do questions.
JD: All right. From Ken Hall, "Will Skype and WebRTC lead the needs of security, like subtle government secured networks?" Well, Skype and WebRTC are different, so I gotta separate those. Will Skype? No. Will WebRTC? Yes. How about that, did I answer it?
EG: Yeah. But let me add something to this. And one is that, I totally agree with you on the WebRTC because that was a very big point of discussion when we were there at the session in November. The other thing is, Skype is owned by Microsoft. We wanna remember that and that Microsoft is big corporate client, they will have to solve that problem, but I agree that is an issue right now. In fact, I'm telling you, I love Skype, I use it all the time but I get so tired of these people who come trolling into my mailbox and I block them, and then they come the next day.
JD: Yeah, I get a lot of... There's a lot of Skype spam now. You're absolutely right, and because it's so prolific, ubiquitous, I have to block them. I guess everybody else does, too. But WebRTC, I would say, the security element built into WebRTC is relative to ease of use, we're gonna see WebRTC and/or a derivative of WebRTC really help us get to the 20, 30 billion endpoints. And, by the way, Elliot, if you want, I'm testing it now. The folks at Intel are making it available on a beta... I'm using it now and using it, and well, it's really, it's something.
EG: I'd like to see it, yeah.
JD: Okay. We'll release it to you. Okay, we've got a question here from James Michaels. He's responding to your prediction about Polycom and consumer space, he says, "They fail, yes. But did they ever really enter the consumer space?"
EG: Well, I think they haven't yet and sorry, let me... But what I was trying to say is that they had a whole tsunami of new product offerings. They did, though, during, in that presentation, they did not mention consumer, all right? End of sentence. But I'm gonna use my favorite word, "but". Andrew Miller did say several months before that, and I can send you the quote, that they were going to enter the consumer space by 2013. He stated that. It was in the beginning of the year before that big array of announcements, so that's why I said that. But then that I didn't enter.
JD: Well, he says a lot of things, doesn't he?
EG: Ooh, we could have fun here.
JD: I won't be catty. I don't want to be catty. Okay, from Scott Mack, "What about the HD Webcam powered by Polycom Technology? Other than press release, it's basically disappeared."
EG: I think he answered the question.
EG: What does that mean?
JD: Here's a good question from Lawrence Jones. Mr. Jones... "What do you think Microsoft will do with links vis-a-vis Skype?"
EG: Good question. Well, now, wait, wait, wait. I thought Microsoft actually made an announcement they were gonna phase it out. I saw something five weeks ago, maybe it was four weeks and six days ago. I might be wrong, but anyway, there was an announcement. I swear, I happened to get out that there was an announcement that it was gonna be end-of-lifed.
JD: What's gonna be end-of-lifed?
EG: The link.
JD: Not so much.
EG: Really? Okay.
JD: Really, really, really. No way, it's not...
EG: I would remember better. Is that what you're saying?
JD: You absolutely would. Now, what I understand is gonna happen is some of the ubiquity, some of the subscribers, they're gonna take the strengths of Skype and merge them into Lync, to the business application.
EG: I do apologize. You are correct. You are correct. First mistake in 33 years, wow.
JD: We talked to Shirley. She'll...
EG: Oh, go ahead. I'm sorry. Next question.
JD: What you wanna tell, most of this, she had a heart failure when you said that. [laughter] Okay, Jones. Somebody give her CPR, somebody. No tongue, no tongue.
EG: All right, okay.
JD: CPR for Jones. All right. We're seeing this more and more. Certainly, Microsoft is out there talking to the Fortune 500 about Lync and they are buying it hook, line and sinker. I think though we're gonna see a little bit of a bullet in the road if Lync does not somehow integrate work with or have a derivative of WebRTC. That's just the way it is.
EG: Oh, yeah. Yeah. Well, that's being discussed, remember, on that end of the browser. When I talked about 53%, I did not include IE, Internet Explorer.
JD: By the way, after you went into that faux pas, Jamie Pointdexter said, "Elliot needs to take his vitamins." [laughter]
JD: All right, we've got six minutes left. It's probably time to talk about the Annual Conference Workshop, March 7th and 8th in Las Vegas. We'll talk a little bit about the speakers that are gonna be there. When we talked to folks from ClearOne, there'll be in this team, Augustino will be talking about the FCC subsidy for telemedicine. There will be CSPs, resellers, integrators, folks from the videoconferencing users group. Probably, I would say, the core folks in the videoconferencing services, Cloud services base will be there.
EG: WebRTC .
JD: I know that Joe will be there.
EG: Yup, a lot of the WebRTC folks will be there especially and the Hypervoice people. I mean we're gonna be talking about all these new value-add applications that are coming out, that are gonna add value and revenue for a conference call.
JD: Well, you'll be doing the market, you'll be talking about where there's growth, whether it's declining. Where it's declining, we'll hear from people right in the middle of it, to talk about the... I know Von asked, "Where are the trends?", and that's the session I think where you can sit down and talk about what the trends are, what the revenue, what the opportunities are.
EG: And we were talking about Steve Augustino who was on the call and who will be there, as he has for several years. And he talked about what is really happening legally, what's about to happen, 'cause there are things more than just the free calls, but there's the taxes and so forth on these calls. So, that will be addressed. There are some very interesting issues that Steve has brought to my attention that he's gonna bring up during that meeting. Yeah.
JD: Yup, I do wanna say congratulations to Pete Holst. He just took over as CEO of Glowpoint, Peter formerly was the CEO of Affinity, and he was originally out of Raindance. So, Pete, good luck, I know you'll do well, you've done well everywhere you've gone, that was an so to speak. Actually, we write about it, in the newsletter.
EG: Anyway, I just couldn't do it, I had to do the other thing. We have three calls coming in. That's interesting. Well, I'll get it. Now, one question, not a question, but a comment. Sorry, I was distracted because we have three calls coming in, which really We're gonna have a drawing right now for coming back to the workshop. And I'm trying to remember, I think Trish is gonna come on and ask you to come up with a couple of numbers. Trish, have I got it right? You've got a list of the people who are actually on the call, so if you could join us.
JD: I've got the list right in front of me, so give me a couple of numbers.
EG: Oh, I'm... Oh, okay. Gotcha, gotcha. Okay. Well, I ____.
JD: How about this? How about 18 years, so give us number one and number eight. How's that?
EG: Whoa, wait, wait, wait. Let me hit back... Actually, I can do that if you like, but I have some favorite numbers, okay?
EG: Number six.
JD: Give me a second. One, two, three, four, five, six... Arran Porter. A-R-R-A-N. Porter, P-O-R-T-E-R. You are the proud winner of Telespan's Future of Conferencing Workshop pass for seven days in Las Vegas. So, that goes to Arran Porter. Okay, what's the next one you've got?
EG: All right, you don't want me to do that. Okay, 'cause that's too far for you to go. Okay, we'll go to 16. We'll go to 16. All right, one, two, three, four... And I'm gonna sleep as he's counting.
JD: David Corbett.
EG: Who's that?
JD: David Corbett.
EG: All right.
JD: Great. David Corbett, Arran Porter. You folks... So, if you'll send an email to email@example.com. Is that correct, Elliot?
EG: That is correct.
JD: Okay, we will handle getting your free pass to you.
EG: Yeah, we'll get all the stuff and, by the way, Chris just came online and said they wanted to be at the conference. You're absolutely right, JD. 'Cause definitely, he's gonna be the... Look, here's the thing folks, I want to be proud of Shirley Hansen's husband.
JD: [laughter] You wanna be, but you can't!
EG: I can't. I can't. The point is that, it's you, folks, who attend, who make it a workshop and make it productive. What we simply wanna do is to bring all of you together so you can ask the questions, raise the issues, and we'll help you come to solutions. All right?
JD: We'll be talking about telemedicine, virtual doctor's offices, something like SPR. We'll be talking about all these applications and vertical opportunities for every CSP, and provider in the business, and you need to be there. I've seen a lot of partnerships built there.
EG: Then we will have a device for Michaelto go hold his iPad. [laughter]
JD: Okay. Well, we're almost out of time, and we thank you for inviting me one more time to join you.
EG: Absolutely. And I appreciate you doing the slides for us. I do think you need to advance a little bit in the slides to get people. [laughter]
JD: All right. Very kind. Thank you, folks. I appreciate it.
EG: Yeah. Trish, tell me what we gotta do. Otherwise, we're gonna end in a wrap.
EG: All I'm gonna say is that the issue that describes us, as well as the archive, will be available by Monday. It will be on our site, and we want to see you at the workshop and if you have questions, email them to me, okay? Thank you, everybody, for attending. Thank you, Arkadin, and thank you JD for your support. Take care.
JD: Take care.
Elliot and JD's predictions will be discussed and debated at TeleSpan's Eighth Annual Future of Conferencing Workshop in Las Vegas, NV on March 7th & 8th at the Palace Station Hotel & Casino.
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