Cisco TelePresence Heads for Small Business

Question: How can Cisco Systems compete with lower-cost video conferencing systems while promoting TelePresence into small and midsize businesses? The VAR Guy got a few answers from Richard McLeod, senior director of worldwide channels at Cisco.

The VAR Guy reached out to Cisco for two reasons. First, Channel Chief Keith Goodwin wrote a Tweet asking partners and media what questions they had for Cisco. Then, The VAR Guy started hearing more chatter about LifeSize Communications pushing video conferencing into small business.

Suddenly The VAR Guy had his question for Cisco’s channel: Does Cisco see TelePresence moving into the small business market? And if so how will the networking giant differentiate from lower-cost options like LifeSize?

Cisco’s McLeod made some solid points. For starters, he noted that Cisco has gradually introduced lower-cost TelePresence systems. Initial offerings like the Cisco TelePresence 3000 series targeted big enterprises with big wallets — often costing $300,000 or so per room. But more recently, Cisco has introduced the 1300 series ($89,000) and the personal 500 series (about $33,900). Clearly, Cisco is trying to reach broader markets with lower price points. Plus service providers are introducing shared TelePresence systems in hotels, which small businesses can pay an hourly fee to leverage.

Even so, challenges remain. While Cisco continues to evangelize TelePresence’s rather amazing sound and video quality, some customers seem to be opting for lower cost video conferencing options from LifeSize — where the LifeSize Express 200 products can cost from $5,999 to $6,999.

Admittedly, comparing selected Cisco TelePresence systems to the LifeSize Express 200 is somewhat akin to comparing a Lexus to a Toyota Corolla. But guess what: Plenty of people think LifeSize — an upscale Corolla of video conferencing — is pretty darn good. LifeSize’s sales rose 45 percent in the first half of 2009 vs. 2008.

TelePresence Differentiators

Still, Cisco sees plenty of areas where Cisco TelePresence continues to differentiate from traditional video conferencing.

McLeod points out that Lifesize is more of a kit-oriented model, where the company supplies the codecs, the video box and camera while the customer or partner buys a plasma or LCD screen and assembles it all together. In contrast, Cisco continues to promote the complete solution approach.

McLeod also points out Cisco’s continued work to integrate WebEx and other applications with TelePresence. Plus, McLeod offers clues about how TelePresence could evolve. For instance, imagine if a TelePresence system could take unstructured data — like spoken words — and organize the information into a structured database for easy search and retrieval. Hmmm. Pretty darn compelling.

“We believe the value of collaboration and TelePresence is not measured purely on price but instead on the benefit you get,” says McLeod. “We find that TelePresence utilization rates are two to three times the typical utilization rates of video conferencing” because video conferencing typically isn’t easy to use, among other reasons.

McLeod concedes the majority of Cisco TelePresence deployments remain at the enterprise level, though Cisco is starting to see mid-market customers adopt it. And yes, Cisco will ultimately march into small businesses and home offices.

With that thought in mind, The VAR Guy continues to believe Cisco TelePresence and Lifesize Communications are on a collision course in the high-def video conferencing markets.

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