November 25, 1996 10 AM ET
Videoconferencing's fuzzy picture
Despite falling prices, corporate desktops not tuning in
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Despite falling prices, maturing technology and a range of new products announced at Comdex in Las Vegas last week, IT's embrace of desktop videoconferencing remains timid at best. Which raises the question: Will desktop videoconferencing ever be ready for prime time? Users and analysts believe it will, although the ramp-up will continue to be gradual. The reasons? Pricing still has not fallen enough to justify full-scale rollouts, and there still is no strong business application driving the need for videoconferencing on every user's desktop. "The technology is really neat, but I don't think desktop video is exceedingly practical right now," said Eric Goldreich, IS director at Sheppard, Mullin, Richter & Hampton, a Los Angeles law firm. "I just don't see tremendous value in seeing a head shot." "We look for technology to aid us in our business, and if it doesn't aid in that or bring value, it carries a low priority for us," said George Bateman, project leader for remote access services at American Express Co., in Phoenix. "[Desktop] videoconferencing will come, I'm sure, but we have higher priorities right now." American Express, like many large companies, has opted for boardroom videoconferencing systems, which, although more expensive per unit, don't require outfitting every PC with the proper hardware and software. "The cost [for LAN-based videoconferencing] could climb up to $5,000 to $7,000 per desktop," Bateman said. "You need to buy a PC and proprietary software, camera equipment, and ISDN lines." However, several elements are beginning to come together to make the technology more practical. The emergence of the H.323 standard that enables videoconferencing over a LAN is one key factor. The specification, supported by major players such as PictureTel Corp. and Intel Corp., aims to ensure interoperability between different vendors' products. "The real future of video on the desktop is the local area networking environment," said Tony Paradiso, director of marketing for PictureTel, in Andover, Mass. "One of the key issues for deployment was a standard, and now we have one." A broader range of video-enabled hardware and low-cost software that enables videoconferencing over analog phone lines or the Internet also is helping push the technology onto more desktops. At Comdex, NetSpeak Corp. introduced WebPhone 3.0, an upgrade to its Internet phone software that supports two-way video at about 6 to 7 frames per second. The software, priced at $49.95, joins similar offerings from VDOnet Corp. and White Pine Software Inc. Separately, U.S. Robotics Inc. introduced a $400 videoconferencing package called Bigpicture, which includes a modem, camera and video capture card. As new products emerge, TeleSpan Publishing Corp. projects the number of desktop videoconferencing units shipped to reach 6.2 million by the year 2000, up from a projected 300,000 this year (see chart, TeleSpan, in fact, scaled back its 1996 projections from its original forecast of 750,000 units. Elliot Gold, president of the Altadena, Calif., researcher, revamped his numbers after Intel delayed the release of its multimedia extension technology called MMX. Even Intel, which expected to take the industry by storm with its ProShare technology, acknowledges the market has fallen short of expectations. "The technology hasn't quite lived up to sales," said Pat Gelsinger, vice president and general manager of the Internet and Communications Group at Intel, in Hillsboro, Ore. "When we started, we had more aggressive expectations. We wanted to increase more rapidly and gain acceptance more quickly." Gelsinger said Intel's videoconferencing sales have doubled each year, but he declined to provide specific revenues. While pricing for desktop videoconferencing systems continues to drop steadily, many believe prices are not low enough. The packages themselves may be affordable, but the infrastructure required to support network-based video is still prohibitive for many sites. Vendors hope the emerging H.324 standard, which enables videoconferencing over analog lines, will remove some of those financial stumbling blocks, since it eliminates the need for dedicated ISDN lines at each desktop. Emerging hardware platforms also are expected to boost desktop sales. Just as desktop makers are readying videoconferencing-enabled systems, laptop makers will be rolling out mobile counterparts. Toshiba America Information Systems Inc. announced at Comdex its Toshiba Tecra 510 series of laptops, which come with Noteworthy Business Video Phone, videoconferencing software that's based on Intel's ProShare. IBM and Hitachi PC Corp. also are rolling out notebooks with integrated videoconferencing capabilities. NEC also is said to be readying a videoconferencing notebook. Some companies are rising to the bait. The Kimmel Cancer Institute at Thomas Jefferson University, in Philadelphia, has used Intel's ProShare for nearly two years as part of a pilot project. Physicians can consult with each other via a videoconference, rather than conduct patient consultations over the phone; they also can review patient charts simultaneously during a call. "At first [videoconferencing] sounded unnecessarily glitzy, but then after awhile, they found it better than a traditional phone call," said Jack London, director of the laboratory for applied computing. "They found it nice to see the other person, especially in this kind of medical environment where things are very competitive." Despite the advances, some observers believe adoption of videoconferencing technology will remain sluggish--not because of the technology or the prices, but for a more basic reason. "Desktop-to-desktop real-time communications is something that is still a cultural adjustment for lots of people," said Robert Mirani, an analyst at The Yankee Group Inc., in Boston. "People can talk to each other over the phone, and that is really natural. The question becomes, do you really need to see the person you're talking to?"
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