High travel costs boost video conferencing market

Higher fuel costs, increased travel hassles and improved technology are leading to a boost in the video conferencing industry.

Local conferencing providers, installers and retailers say they’re seeing more businesses looking to rent or buy the equipment allowing them to digitally converse face to face. Businesses tend to use video conferencing for companywide presentations or frequent communications between groups that are separately located.

At California-based Polycom Inc. (Nasdaq: PLCM), which has operations in Boulder, the video conferencing business was up 20 to 30 percent in 2007, said Joan Vandermate, vice president of marketing for Polycom’s video group. Those growth rates are continuing into 2008, she said.

Video conferencing has been around for awhile, but some early adopters were turned off by technology’s past tendencies of delayed, choppy video and less reliable connections than a regular audio conference call.

These days, higher travel costs are leading many businesses to give video conferencing another chance, and they’re finding that the technology has improved, Vandermate said. A quality system can provide high-definition video, full surround-sound and faster video chipsets to cut the transmission delay to less than one-tenth of a second.

“Now when you have a video conference, you can actually have a normal conversation with the other person,” she said.

A high-definition, single-screen system with a camera and speakers can start in the $8,000 to $15,000 range to buy.

“When you figure airline costs, cabs, hotels and meals … it would take just a couple of business trips to justify the price of a good video conferencing system,” Vandermate said.

Beyond getting good equipment, businesses need to make sure they get the dedicated bandwidth for quick and smooth transmissions, said Rob Bailey, operations manager for rentals and staging at Ceavco Inc. in Denver.

Ceavco rents and sells video conferencing equipment in Denver-Boulder area. Boulder-based Matrix Display Systems Inc. also provides video conferencing services and support locally.

A basic system can run a business about $550 to $1,000 a day to rent, Bailey said. Ceavco then charges $42.50 an hour for up to five hours of technician support. For a less expensive alternative, businesses can use Ceavco’s small onsite studio in Denver for $275 an hour.

For businesses who don’t need live video conferencing, but do need live sharing of visual graphic presentations along with audio conferencing, there are programs like Sonic Foundry Inc.’s Mediasite, which can work via the Internet.

The program allows interactivity through e-mail and a polling feature.

“When you’re conferencing with 500 people, you don’t necessarily want everyone on video talking at once,” Bailey said. Something like the polling feature with Mediasite allows quick and simple feedback.

Back at Polycom, Vandermate said a higher gas price is a likely reason why even single-city companies are using more video conferencing.

“We tend to think video conferencing as being most useful for those long-distance communications – the company in U.S. talking to the company in Japan,” she said.  “But we’re finding more companies with several locations just in one city are opting to use video conferencing rather than driving across town.”

So will a good video conferencing system kill the business trip?

“No,” Vandermate said. “I think it might reduce the number of trips people take, but video will not replace face-to-face business travel. People still want to shake hands and share a meal.”

Contact David Clucas at 303-440-4950 or dclucas@bcbr.com.

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