The real world pace of the video conferencing market hasn’t lived up to its hype, and while companies such as Cisco Systems (
News -
Alert) Inc. are helping develop impressive, high-quality telepresence solutions, they likely will remain too expensive for all but some larger enterprises, a telecommunications insider told TMCnet in an interview.
According to Corey McFadden, managing partner of Philadelphia-based
Infradapt – a technology solutions firm with a strong IP telephony service concentration – while pure-play VoIP providers with questionable competitive advantages have fallen by the wayside, the technology itself eliminates barriers of entry and enables large well-heeled providers to edge out their smaller rivals.
We may have seen some of that this week with the
acquisition for $1.17 million by
D4 Holdings LLC – which owns ACN, Inc., an international direct seller of telecom services – of Manhattan-based VoIP software solutions developer deltathree Inc.
Yet for McFadden, pure-play VoIP providers eventually will offer a mix of price and service differentiators and compete side-by-side with the telecom giants.
You never know what you’re going to get when you start talking to a telecom insider like McFadden.
As he does in a
video interview at ITEXPO (
News -
Alert) with TMC Group Managing Editor Erik Linask, McFadden talked to us a little about how, if you start to peel back the layers, most organizations have something that resembles a call or contact center – and that’s where Infradapt often comes in, reducing costs by 10 to 20 percent with its Asterisk (
News -
Alert)-based solutions.
He’s right – and Infradapt’s services are especially desirable in this slower economy. The company’s solutions range from basic IT services through multi-tier outsourced support and business continuity solutions, and in terms of VoIP, it specializes in designing, integrating, and supporting converged voice networks including multi-site and call center systems.
We found McFadden’s thoughts on the video-based space provocative and insightful.
Our exchange follows.
TMCnet: When we spoke at the Internet Telephony Conference & Expo, you said your sense was that video-based communications, such as telepresence, are growing a bit, but that the video aspect has been oversold somewhat. Talk to us about that.
Corey McFadden (pictured left): In one form or another, personal video conferencing technology has been available for about 15 years. Early implementations were extremely crude but over time the availability of Webcams and other inexpensive cameras pushed down the barriers of entry and more people began to experiment with video.
I read a statistic a number of years ago that indicated 50 percent of those who installed a Webcam and made one successful video call never made another. I’m not sure how accurate that was at the time, but it seems consistent with my experience.
While some users undoubtedly like the face-to-face contact, when probed, most business users say they “don’t want to see who they’re speaking with,” and vice-versa. (Especially in the era of telecommuters where conference calls may be conducted in pajamas…)
Undoubtedly, these sentiments are eroding and the market is taking a more progressive view toward personal video conferencing – one need not look further than Skype as evidence of this. The pace at this point, however, doesn’t seem consistent with the hype. I would say the days of the non-video telephone are not yet numbered...
TMCnet: Telepresence, as Avistar told us here and Glowpoint, Inc. told us here, are faring well as market segments now and certainly their backers hope they represent the future. Yet some IT insiders, including you, feel that Cisco Systems Inc. could be creating a market for something that may or may not exist. Talk to us about what you’ve seen that makes you wonder.
CM: The warm visual of a travelling parent seeing his wife and children’s longing looks in Cisco’s television spots certainly tug the heartstrings, but few professionals I’ve encountered regularly use personal video conferencing technology. While some large enterprises have adopted high-definition telepresence solutions to cut down internal travel, the total number of these high-dollar implementations seems to be in the low thousands worldwide and not likely to go too far downmarket anytime soon. I don’t doubt the existence of a market for these solutions but its real size is anyone’s guess.
TMCnet: Certainly, video phones and video conferencing have existed for the past 10 years. Gauge for us the progress that you’ve seen in video products in the past decade – what, if anything, are you seeing there that makes you skeptical of the market’s future?
CM: The market has had access to relatively inexpensive mid-range video solutions for a long time and despite that, implementations – not to mention their usage after installation – seem fairly stagnant. I’d love to be surprised and see high-def telepresence solutions tip the scale on wider adoption of video conferencing in the broader market, but until that happens I’ll be waiting on the sidelines to buy my quarter-million-dollar telepresence kit.
TMCnet: You ran a session at ITEXPO called “Hidden Call Centers,” and you mentioned during a video interview with TMC (News - Alert) Group Managing Editor Erik Linask that many companies could benefit from Infradapt’s technology, even if they don’t realize that there are savings and efficiencies to be had in their own versions of a call or contact center. Explain what you mean.
CM: The vision of a “call center” for many people is intertwined with telemarketing and large phone banks. If you ask the average C-level executive without experience managing phone agents whether their organization has a call center, they’re very likely to respond with a definitive “no.” However, almost every organization that has reached a certain size usually has several (or dozens) of small call centers throughout the enterprise.
Whether it be sales agents required to fulfill a quota of calls each day or a customer service group where call abandonment and first call resolution is a concern, “hidden” contact centers tend to proliferate throughout enterprises.
They also exist in smaller organizations – one we see very consistently that many people find surprising is medical offices. When an office reaches a size of around six to ten doctors, there will usually be several people taking incoming calls on a full-time basis.
The medical example is probably a good way to explain what the problems are and what can be done. Usually operating on a traditional PBX without ACD or advanced functionality, managers lack hour-by-hour call numbers, abandonment stats, and (on a functional level) the ability to monitor, record, and otherwise manage the quality of agents’ calls.
In many smaller organizations, deploying inexpensive technologies like Asterisk yield fantastic ROI by attacking these obvious gaps as well as the overall telecom budget by trimming unnecessary phone lines, and so on.
In larger organizations, contact center software platforms provide more detailed analytics, integrated reporting, and other features that create value and reduce costs. For example, introducing a predictive dialer in an outbound sales group can improve contacts-per-hour by 100 percent or more.
The moral of the story is that it’s increasingly important to take a hard look at your company’s operations and try to uncover any “hidden contact centers” because fixing them will have immediate and substantial bottom-line impact.
TMCnet: Finally, as an industry insider, you’re very aware of the debate about VoIP’s future as a technology. TMC Vice President Tom Keating writes here of the ITEXPO’s success, and cites a widely read Alec Saunders’ (News - Alert) blog post by way of counterpoint. At TMC’s last ITEXPO West, officials with Skype went so far as to say that “VoIP is dead,” nodding toward a future where the technology is one of three pillars in a voice, video and data world. What are your thoughts?
CM: It’s a little confusing to take a stab at the future of “VoIP as a technology” because a few people have chosen to grab some attention by pronouncing “VoIP is dead.” What those people seem to be suggesting is the era of pure-play VoIP providers like Vonage is over and that VoIP will simply fall in line with other ubiquitous technologies like TCP/IP as a pillar of our modern communications infrastructure.
Surely, pure-play VoIP providers with questionable competitive advantages have fallen by the wayside – the market may ultimately support only a small number of them – and the ranks of their dead will continue to swell in the near-term. The irony of pure-play VoIP is really that the technology itself eliminates barriers of entry and enables large well-heeled providers to edge out their smaller (local/niche) rivals that have chosen to compete on price alone. We’ve been in a race to the bottom in this space for years, and until we end up at some price equilibrium it’s a conversation that’s going to continue to be shaped by shaving fractions of cents off an organization’s per-minute termination costs.
Ultimately, a scenario will evolve where pure-play VoIP providers offering a blend of price and service differentiators and compete side-by-side with the telecom behemoths we’ve all come to know and love. In the mean time, the market will be fast-changing and probably pretty bloody for those without a really compelling business model.
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Michael Dinan is a contributing editor for TMCnet, covering news in the IP communications, call center and customer relationship management industries. To read more of Michael's articles, please visit his columnist page.
Edited by
Michael Dinan
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