Telepresence Picture Getting Wider

By Martin Vilaboy

Before a business technology or application moves “down market,” it generally first must enjoy some significant traction at the upper end, most notably among the vaunted Fortune 500 companies. In the case of telepresence, however, it doesn’t appear some contestants are willing to wait.

That’s not to say that leading vendors have struggled to make inroads into enterprise markets, at least not any more than most other new technology categories. A lot of hope is being harnessed to business video applications, and telepresence sits among them. It’s simply a product that’s still in the very early stages of its lifecycle.

But, nowadays, technology can move much faster than most markets do.

For the most part, telepresence solutions still are within the reach of only a small percentage of businesses. The leading providers such as Cisco, Polycom and Hewlett-Packard, which remain adamant to the notion that providing a truly immersive, “just like being there” experience requires fully dedicated and highly controlled environments, even down to the tables and chairs, can command as much as $300,000 to $500,000 up front to outfit a telepresence room. HP recently introduced its “affordable” HP Halo Collaboration Studio Professional Edition, for example, starting at a base price of $329,000 per room.

More accessible alternatives, however, now are available, and those start-up providers already are taking the technology beyond Fortune 500 boardrooms. Telanetix, for one, is currently deploying its telepresence solution for an investment firm with about 150 employees, says Rick Ono, Telanetix chief operating officer. “And we are in discussions with several companies that are much smaller than that.”

The company also recently finished a nationwide deployment of it telepresence systems for Mercedes-Benz that cost around $85,000 to $90,000 per room, says Ono. And this was no “cut-rate” deployment. Being Mercedes-Benz, the aesthetics and environment had to be “top notch,” he says.

“The closest competition came in at $300,000 per room,” say Ono.

Of course, for many mid-market firms, any significant upfront investment will prove prohibitive, so Telanetix also recently announced a program whereby companies can lease a “fully featured” but scaled-down version of its digital telepresence solution through a $1,000 per month financing plan.

Meanwhile, executives at upstart LifeSize say the essential elements of a “plug-and-play,” high-definition telepresence room can be purchased for as low as $10,000 per room.

Similar type slashing can be seen in operating costs, as well. Where leading solutions can have monthly operating overhead of $13,000 to $14,000, largely for bandwidth, says Ono, lesser-known vendors can keep overhead costs under $4,000 a month.

The ability to meet mid-market firms at these levels largely comes down to flexibility in the solution, says Ono. For most companies looking to deploy a nationwide solution, real estate is at a premium and is tough to dedicate solely to a conferencing or telepresence room. “They want to use the room for multiple purposes,” he says. “We are one of the few vendors that actually allow you to do that.”

Likewise, Telanetix customers rarely, if ever, want to go through a major re-construction effort to bring in a system. That means a solution has to be able to adapt to different room environments, no matter how harsh.

“We may be in a room with a huge air conditioning blower right above the system,” says Ono. “We have to deal with that.”

Flexibility, says Ono, is largely facilitated by Telanetix’s proprietary codec (coder/decoder), which reacts and adapts to less than ideal environments. “It makes our life very easy when everything is consistent,” he says, “but that is not real life.”

Likewise, where the major telepresence players have roots in the hardware business, Telanetix sees itself as a software-based organization. Its solutions, for example, features software (multiple codec, control system, bandwidth shaping, etc.) preloaded onto a Linux server. “What we deliver to the client is actually an appliance,” says Ono.

“If you walk into our facility, you are not going to see a lot of production lines with board assemblies,” he says. “Most of our engineers are software designers.”

And this approach tends to keep operating and development costs down, he says, which can be passed onto the end user.

But no matter how they are achieved, lower costs tend to create more opportunities. And if high costs can’t be avoided, maybe they can be shared.

Consider a scenario, for example, whereby telepresence systems are marketed to corporate building owners, which in turn dedicate a room that could be offered, likely for a fee, to corporate tenants for ad-hoc virtual meetings, much the way buildings sometimes will offer shared boardroom environments.

While it’s true that early attempts at providing public access rooms for traditional video conferencing have been slow to go, one could say the same thing about the overall acceptance and utilization of traditional video conferencing within businesses so far. And a fundamental selling point of telepresence has been how the ease of use and “life like” experience can boost customer utilization rates of conferencing rooms and systems. Proponents point to early cases where, once the investments are made, utilization rates went from single-digit percentages on legacy video conferencing systems to as much as 80 percent for virtual meeting solutions.

And since the target here is mid-markets businesses in large buildings, the local loop should rarely be an issue.

Still, this scenario likely would require rather wide acceptance in order for building owners to have a shot at recouping investments. Breaking even on just operating costs of say $5,000 a month, for example, would require “renting” out the room one hour every work day at $250 an hour. So enough office buildings need to be outfitted, across most major downtown areas, whereby enough tenants are able to use the telepresence systems fairly consistently.

Real estate trusts with properties, and possibly tenants, in multiple metro markets are the obvious target early on.

Decreasing price points make the case a bit easier, but increased interoperability between varies vendors’ solutions, which presently is very limited, also would do lots of good.

Elsewhere, a somewhat similar model is being developed by telepresence consulting group, The Human Productivity Lab, through its Powwow Virtual initiative. The goal is to get 10 to 50-plus publicly available telepresence facilities up and profitably operating globally “before the competition figures out how to spell telepresence,” says Powwow’s creators. In addition to the revenue model, the chain of videoconferencing centers is being touted as a way to spread awareness, while serving as a type of showroom for various vendors’ technologies.

The bottom line is that telepresence platforms will be increasingly accessible to more than just the largest multinational corporations. In fact, according to Ono, employee headcount is less important than transaction rate to the buying decision.

Often, he says, it comes down to “how much communication is needed between my two or three offices, and how critical it is that someone is in front of me right now?” In other words, when businesses need to move fast, “this simply accommodates the speed of their business.”

And the need for speed is by no means limited to Fortune 500 companies. IP