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Home Telepresence/Videoconferencing at CES - The Battle for the Living Room

January 12, 2010 | Howard Lichtman
The big stories for the telepresence and visual collaboration industry coming out of last week's Consumer Electronics Show in Las Vegas is the rapidly developing "Battle for the Living Room" where telepresence and videoconferencing companies, consumer electronics companies, and networking providers have unsheathed their swords in the billion dollar contest to provide two-way videoconferencing over broadband internet connections to the home. Cisco, Polycom/IBM, and Skype/Panasonic/LG have all announced products that will bring high definition videoconferencing into the living room. In the article below I take a look at the current and future applications for home telepresence and videoconferencing, the various business models, the players who announced they are heading to the living room at CES and the other potential industry participants lurking in the home office and on the family computer who just might join them.    

The Applications
To kick it off: Why would anyone want a videoconferencing capability in their television set??? Here is a view of the future applications that I believe will be the driving home telepresence and videoconferencing.  

- "The Grandma Channel" - Videochat with friends and relatives with grandparents being the "Killer App". Might as well go ahead and order a 65 inch screen for the dining room table. 
- Tele-work / Business Communications - The ability to work from home and still meet with colleagues, partners, customers and prospective customers globally. Provides a disaster recovery capability in the case of a public health emergency, terrorist attack, false flag terrorist attack, currency crisis, etc.
- Tele-health - Hospitals all over the world are already salivating over the prospect of billing insurance companies and govt health programs for services delivered over video.
- Tele-psychiatry - Should be huge... Especially here in Washington DC.
- Shopping - Some people like shopping just to interact with other human beings... now they don't even have to leave the lazy-boy! 
- Distance Learning - Attend MIT from the comfort of your couch (or get your associate degree in "Homeland Security" from DeVry).
- Broadcasting* - Could Alex Jones create his own network? *Some IP Multicast Required!
- Narrowcasting - Expect to be able to transmit that cute video of junior's first steps you captured on your Flip via store and forward to the rest of the family.
- Video Technical Support - "Ma'am... I can see your problem... The DVD/CD Drive is not a drink holder"  
- Videodating - meets Logan's Run / THX 1138.
- Unfortunately...Pornography - Web cam peep shows go high-def on the big screen.


Cisco CEO John Chambers Demonstrates Home TelePresence at CES

The Business Models & Opportunities

Hardware- Video Endpoints, Video Appliances, HD Cameras, etc. These have to be sold to end-users directly, bundled with service offerings (Think of the Tivo/DVR that came bundled with your cable subscription), or given away free with a services subscription.  We think the bundle will be king and the winners will those companies who can cost-effectively bundle a quality experience with the bandwidth and portal/directory needed to make videocalling easy, fun and useful. 

Software -
Free/"Freemium"/lowcost software-based video codecs are everywhere.  You can pick up a free video codec from Logititech when you buy one of their webcams, Google, Microsoft and Yahoo give em away for free, you can download a free codec from ooVoo, skype, Mirial, and 1/2 dozen other players that give you basic functionality for free with some charging extra for extras: multi-party calls, content sharing, higher resolution, etc. Since an eventual de-facto standard in inter-operability will ultimately emerge and it is hard to compete with "free" (and the bundled offerings of the television vendors, cable companies and carriers), we don't expect consumers to be paying for marginally better offerings. What customers will be paying for is capabilities which offer value.  Being able to reach traditional videoconferencing endpoints or public/private Cisco/Polycom telepresence suites, or portals/directories which provide value or a business opportunity will pull consumers to one service vs. another.

Network & Portal Access - Providing crystal clear high definition video calls requires at bare minimum of about 1MB per second of symmetrical QoS bandwidth.  Depending on how multi-point calling and data collaboration are delivered that figure can double, triple, or more. We see business users potentially paying a premium for high quality videocalling services and applications.  Video chat with friends might be free/low cost but connecting to traditional videoconferencing endpoints or public/private telepresence systems will be business class services that you might be paying for.   Expect Verizon Fios, Comcast, Time Warner Cable, and other FTTH / Cable providers to be the big players in this space and I wouldn't be surprised to see a surcharge for symmetrical QoS bandwidth.  While I was researching this article I asked Dr. Jonathan Rosenberg, the Chief Technology Strategist for Skype if they were going to be partnering with the network providers for guaranteed QoS connections.  He started to explain to me how network quality on general purpose broadband and cable connections was good enough when he had a network issue and his Skype call was dropped.  The company's PR manager who was still connected re-dialed him on his cell phone.  
Portals / Directories - Here is where we see the real revenue opportunities for niche players.  Just having the theoretical capability to call someone does not make a particular application useful and/or desirable.  Being able to aggregate eye-balls (and cameras) into useful communities of users willing to pay good money for the privilege is where the entrepreneurial money will be made.  We expect the network providers and technology vendors to duel a bit on who owns the portal/directory and the associated revenue but something similar to the app store model for iPhones and television apps will likely emerge.    What is going to be Hot? Video dating portals, hiring/job interviews, consulting / software development (onshore/offshore) aggregators, distance learning and tutoring, shopping, social networking, tele-health,  gaming, and unfortunately pornography.   Expect partnership deals with established brands seeking to differentiate themselves by connecting with consumers in a more intimate way.   

Video Call Centers - As more and more consumers have high quality video calling capabilities in their TeeVees and computers expect more and more businesses to address that market in a differentiated way. We expect to see this on higher ticket items initially where perceived trust is a factor and the high cost of the product and service justifies the expense of setting up a call center: insurance, real estate, private client wealth management, personal electronics and high end retail will probably typify the early adopters.      

Powwwow @ Home - We've Seen Home Telepresence Coming for A While.

Consumer Sales and Home Theater Integration - Is video delivered to a standard television set telepresence? Nope!  but it could be!  I expect that a market will develop on the high end for integration of video into home theater environments to more closely match the human factors of participants especially for folks who are using the systems for business.  In Powwow Virtual, our business model for a global network of public telepresence conferencing centers we include a retail area to promote home telepresence and videoconferencing, a demonstration capability to show it elegantly integrated into a home theater environment, and a design and installation practice to artfully integrate it into client homes to create the most life-like experiences possible.  


The Players & Platforms


Cisco has a heavy investment in telepresence and videoconferencing including their recent $3.4 Billion dollar acquisition of videoconferencing maker TANDBERG.  The company announced that "home telepresence" will enter US field trials in the spring with Verizon and in France with France Telecom. The company has previous estimated the cost of home telepresence at $1000.    

Technology Platform(s): Cisco has developed their own H.264 video codec for Cisco TelePresence and they have recently acquired videoconferencing equipment vendor TANDBERG with their own standards-based videoconferencing codecs. The company owns set-top box manufacturer Scientific Atlanta and Hong Kong-based set top box manufacturer KVM which has a strong presence in China making the set top box the prime platform for the assault on the home.  The first trials will use a stand alone appliance.  
Partners: Verizon, France Telecom
Official Announcement: Cisco Press Release

Polycom / IBM

Polycom and IBM were demonstrating "home telepresence" which has been reported as Polycom's HDX videoconferencing packaged for deployments in the home and based on IBM and Philip's "Net TV" offerings in Europe with a prototype HD conferencing solution accessible via one of their widgets.  IBM will be providing the backend video network infrastructure in the cloud. 

Technology Platform(s): Polycom Videoconferencing Endpoints, Appliance, and software codecs
Partners: IBM

Skype_Home_Telepresence.jpgSkype announced they have partnered with LG and Panasonic to deliver HD videoconferencing to television sets.  Other partners include In Store Solutions and FaceVsion which will be providing HD video cameras with microphone arrays specially designed for Skype. The company is now shipping an HD version of its video codec with the latest release of Skype which requires an HD camera and beefy processor.  The company claims 520MM registered users with 34% of calls using video today and up to 50% of calls using video on holidays.   

Technology Platforms: Internet-Enabled HD Television Sets so far including Panasonic TVs and 26 different LG HD TVs that will be launched this year.  Panasonic also officially launched an HD videoconferencing platform the KX-VC500 which we assume will be skype enabled but have not yet confirmed.
Partners: LG, Panasonic

Other Potential Players

So now that Cisco/Verizon/France Telecom, Polycom/IBM, and Skype/Panasonic/LG are moving into the space who are the other players and potential entrants? 

Logitech/LifeSize Communications
- We described the potential of Logitech/LifeSize in November Here. The executive summary: The world's largest manufacturer of webcams with global distribution and an existing and capable freemium videoconferencing package with more capabilities from LifeSize on the way.

Vidyo - Intel's CEO Paul Otellini demonstrated videoconferencing over a smart phone during his CES keynote and used Vidyo's SVC codec to do it.  Vidyo is also the video engine in Google chat and, along with Polycom and IP-V Gateways, my pick(s) for the company(ies) most likely to get acquired in 2010.

ooVoo -  One of the leading standalone providers of consumer videoconferencing.  The company also operates a "freemium" model with the ability to download and use its software based codec for free with limited capabilities with the ability to upgrade to a premium version for free.

Vizio's Television Remote Control of the Future... Today!

Vizio - The television manufacturer with the Wal-mart distribution partnership already has multiple television sets enabled with wi-fi and the ability to integrate internet apps that do everything from provide streaming weather updates to access your Facebook account.  The company has 25+ apps right now and predicts hundreds by the end of 2010.  Could one of those be videoconferencing? 

Microsoft - Last year the company announced that TANDBERG had developed a transcoder for MS's Real Time Video to H.264 at HD quality.  The company has a consumer videoconferencing capability in Windows Live Messenger and their hardware division has released a 720p HD webcam called the LifeCam Cinema. The company also has two different platforms that integrate television with computing: Windows Media Center and Mediaroom.

Apple - Apple has its iChat videoconferencing client and is rumored to be rolling out a mobile version with its rumored soon to be released tablet PC that is rumored to be called the iSlate.  The company has filed a patent application on a method of hiding a camera behind the screen of a laptop (and tv?) which would improve eye-line for videoconferencing as well as a patent application on a head tracking display that could be used for videoconferencing as well.    

A interesting personal note and a complete coincidence

My brother and I recently bought my mom a new laptop computer that I have been setting up for her and am shipping out today (Please don't mention it to her.. it's a surprise... seriously!) My brother and I bought her a Logitech webcam (The c500... weak and meager... should have sprung for the 9000)  so she can video chat with us and her grandkids.  I set it up with three different personal videoconferencing programs Logitech Vid, Skype and Vidyo Desktop.  Sign of the Times?

About the Author
HSL_Headshot.jpgHoward Lichtman is the President of the Human Productivity Lab, an independent consultancy focused on telepresence and effective visual collaboration for organizations looking to improve productivity and reduce costs.  The Lab provides corporate clients with acquisition consulting, RFI/RFP creation, and ROI/TCO financial modeling on telepresence systems, telepresence managed services, and inter-networking telepresence. The Lab also provides investors with prescient insight into the rapidly growing telepresence industry.  Mr. Lichtman is also the publisher of Telepresence Options, the #1 website on the internet covering telepresence technologies and the Editor of the Telepresence Options Telegraph.

Thanks to Peter Brockmann of Brockmann and Company and Ira Weinstein of Wainhouse Research who were both good enough to brief me from the show floor at CES for this report.

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