In for the Long Haul
Nearly a year ago, Pro AV Magazine reported that HD videoconferencing and telepresence would be formidable trends for the year [see ?Trends to Watch in 2007,? January]. We weren't far off.
Nearly a year ago, Pro AV Magazine reported that HD videoconferencing and telepresence would be formidable trends for the year [see “Trends to Watch in 2007,” January]. We weren't far off.
Tandberg, a major player in the videoconferencing industry based in Oslo, Norway, has proof that the trend is taking off. The company sold 5,296 more units in the third quarter of 2007 than it did during the same time last year. Its third-quarter revenue is $165.3 million, up from last year's third-quarter revenue of $109.6 million — an increase of 50.8 percent. The company's revenue is up from $64.4 million to $92.4 million in the Americas Theater alone.
“Video is becoming an integral component of a total IP solution,” says Fredrik Halvorsen, the company's CEO. “Tandberg's healthy top line growth in the third quarter reflects this industry trend.”
Likewise, Polycom reports a 39 percent year-over-year growth from the first nine months of 2006 to the first nine months of 2007. While the company's acquisition of SpectraLink contributed $36.4 million to its net revenue sales for the second quarter of this year (and opens a slew of wireless opportunities), its total net revenue by the end of September was $666.6 million, compared to $495.9 million in 2006.
On a product-line basis, 61 percent of the $146.4 million revenue came from video solutions, a smaller slice of a bigger pie compared to 2006's 71 percent of $123.4 million. “Overall, demand for IP-based collaboration solutions remains robust,” says Robert Hagerty, Polycom's chairman and CEO. The company predicts growth in its HD, desktop, voice, and telepresence products.
While everything seems to be looking up for Tandberg and Polycom, Austin, Texas–based LifeSize Communications hopes to throw a wrench in their plans. The four-year-old company offers HD videoconferencing at a fraction of its competitors' costs. For example, the LifeSize Conference telepresence solution (shown above) is only $33,999, compared to Polycom's $200,000 systems. Robert Durand, director of corporate communications for LifeSize, says the company is able to do this because it owns the system “from glass to glass.”
“We built our own camera, starting with the lens and the HD image sensor. From the camera, we process the RGB pixels directly in our own image processor, a LifeSize chip. Using our own chip instead of running software on DSP chips gives us three things: greater control of the image quality and processing, faster performance because the processing is done in silicon, and lower cost,” Durand says. “The LifeSize architecture is a full generation ahead of Polycom's HD architecture,” he adds. “Tandberg isn't even full HD. Cisco and HP pulled off-the-shelf components and tied them together, a real brute force approach that is both expensive and inefficient.”
According to LifeSize public relations representative Dave Reddy, the company hopes to eventually have a telepresence system in every home. That's not too farfetched, considering it also expects to have its low-priced systems down to $1,000 within three years.
Polycom and Tandberg may not have affordable prices but they do have integration partnerships with IT and software companies such as HP and Microsoft. So which competing factor will win out? We'll keep an eye on this one.