Posted: 5/2003

In Search Of…
Shopping for Ideal Desktop Video
Services for Channel Partners

By Christine M. Meeusen

It
took about 50 years to get 80 percent of the U.S. population using the telephone
and 10 years to get 80 percent of the population using e-mail. However, it is
estimated that within three to four years, 80 percent of the PC-using public
will view the Web-cam as a significant input device.

With this accelerated adoption curve
in mind, Expert Business Solutions LLC, a U.S. and European analyst group, went
shopping for technology companies that offer useful desktop video communication
tools, including:

We looked at what was happening and
saw that most of the conference companies that offered Web-enabled conferencing
were doing it on the same old price model — per minute, per leg, and we said,
"This is nuts." We also found that most market choices for
corporations and businesses led to capital investments. Therefore, we developed
a qualification list as follows:

Then, we went searching for
technology companies that made the cut. Those are the ones we are watching;
those are the companies that we are helping find distribution. There are few
technology companies that meet all the criteria. Because the market conditions
are as they are, one would think that these companies would be swiftly moving to
roll out their services around the world. Yet, they are not.

Why? It isn’t simple. Service
quality is dependent on each segment of the network, and a service rollout
includes ISP networks, corporate networks, WANs and LANs. So, a company’s IT
group plays a critical role in making any voice/video application work. Over the
last two years, many prospects have cut IT staff and are not looking for new
things to do. After all, even a no-capital-investment project requires time from
valuable and increasingly scarce internal resources.

For many, the situation is made more
difficult because the PC-using public is not homogenous. There are some that can
stream over broadband and some that cannot. There are some on XP (with its own
set of new restrictions) and some that are not.

In addition, many technology
companies are burdened with debt and though they have great software, their
marketing arms are tied. They want to move aggressively, but they can’t. Lack of
trained resources and lack of money to get trained resources have many of the
software companies in a position where the owners/founders are still doing 85
percent of the sales themselves.

These are some of the issues that
are delaying progress but may provide an opportunity for distributors,
consultants and systems integrators that know their markets. These channel
partners can lend objective assistance and knowledge required to overcome the
technology differences by presenting the right software to the right target
market and by packaging solutions involving more than one technology vendor. In
addition, the distribution channel partners are close to their customers and
know best how to package and price services to encourage adoption by their
bases.

Click Here For Graphs

TIMING

The timing for entry of desktop
video services at both the residential and corporate level is good. Telecom
companies are looking for services that give their dial-up customers an
incentive to move on to broadband. As well, they are looking for anything that
will allow differentiation from "the other service provider" in town.

For corporations, the time is right
because most of the large ones and many of the medium-sized ones are sitting
with just about everything they need to make this happen. They have PCs on every
desk, a robust data network, excess capacity and access to additional cheap
bandwidth (compared to flights, hotels and conference calls). For those that
have invested in network infrastructure, they are sitting on sunk investments
they are not using to the fullest capabilities.

ISPs and broadband service providers
are looking for that next killer application and Expert Business Solutions is
betting that the next killer application isn’t an application at all, but a tool
— or tools — that allow everyone across all fields to be more effective at
their jobs, like e-mail did for us in only the last 10 years.

Small businesses, SOHOs and
consumers are ready to subscribe to these services. Although large corporations
easily can cost-justify the purchase of a license server (if they have all other
infrastructure in place), small companies and residential users are unwilling to
pay the $500 to $1,000 they would have to invest in desktop software (that comes
with no service level guarantees) when they are acutely aware the software will
be changing and they will have to pay again for something newer and better a
year to 18 months later. That’s a tough sell.

What isn’t a tough sale, however, is
a monthly service fee added on top of the broadband services for a video
communication service that comes with free updates, as long as you are
subscribed, and gives the consumer the option of canceling at any time.
Consumers will pay an extra fee per month to their broadband service provider if
it means they can use their PC to replace costs elsewhere — for phone calls and
video conferences and for making video e-mails and video training material.

ISPs and broadband service providers
have an opportunity here to use everything they already have (network,
marketing, distribution) to add services that not only generate revenue, but
also feed the growing demand for broadband.

Thus, there are the technology
companies on one side with hot new Web-enabled software that could earn
recurring revenues for broadband service providers and distributors, or
significantly cut corporate operating costs for enterprises. On the other side,
we have a willing and waiting consumer base. But who will bridge the gap? Who
will help the two parties help themselves?

To the unemployed systems
integrators, consultants and implementation specialists, hear this call. During
these, the worst of times, there is opportunity for companies that can bring the
two parties together quickly and show results: either cost-cutting results for
the corporations or revenue-generating results for the ISPs and resellers.

There are opportunities for those
that know these tools inside and out and can spot the places inside corporations
where they can be most effective. There are opportunities for those that can
alternately lead by the hand and wield the whip over a troubled ISP and get them
to roll out these services in a short time. There also are opportunities for
distributors. And although distributors that neither own nor operate an ATM
network cannot really get into the point-to-point desktop conferencing business
(without a network-operating partner, anyway), there is at least one software
company that allows distributors to profit from the sale of the software without
having anything to do with the network that supports it. This company gives
distributors "video e-mail in a box," which allows users to make
unlimited video e-mails, each hosted for two weeks, and the messages are hosted
by the software service provider’s network. The e-mail is sent via a Web link
and the distributor need not worry about the network support.

There is clearly opportunity for
savvy channel partners, and the time is right for deployment of technologies and
applications that can show bottom-line savings to the consumer or to the
corporation. We’re at war; strange new diseases are keeping people from flying.
Might it not be a very good time to introduce point-to-point desktop
conferencing? Businesses are struggling; travel budgets and training budgets are
being slashed. Wouldn’t this be a good time to introduce Web-enabled software
that lets people accomplish the same thing without having to travel?

Christine M. Meeusen is an
analyst with Expert Business Solutions LLC, a consultancy that specialized in
matching video communications technology companies to the right distribution
partners and business users. Meeusen is based in Amsterdam and can be reached at
+31 20 345 2420 or via e-mail at [email protected].