AUDIO/VIDEO CONFERENCING: Boardroom to Courtroom

From 2000 to the year 2004, Indian conferencing market has come a long way.
From the early days of low-cost, vanilla audio conferencing, the market has
moved ahead and diversified into newer offerings such as video and now Web
conferencing catering to diverse segments. Web conferencing grew in the last two
years and this has been primarily due to the fillip provided by the IT and ITeS
industry. The total market for audio-video conferencing products and solutions
during

2004—05 was Rs 43 crore.

Polycom
continued to enjoy the leadership position with about 46 percent market share
and total revenue of Rs 19.8 crore. European vendor Tandberg followed with 30.6
percent market share and a revenue of Rs 13.2 crore. Tandberg, by virtue of its
high-end products, was able to garner some share from Polycom thanks to a big
order from a Tamil Nadu government project, to connect courts across the state.
The project worth Rs 6 crore was for connecting 80 locations and was the largest
installations during FY 2004—05. In volume terms, total number of endpoint
units sold during FY 2004—05 was 2200, which included desktop systems and
group systems. Out of this, Polycom's share was about 50 percent. Tandberg
closely followed with 40 percent of volume business. Revenue of other players
such as Sony, Aethra, and Vcon could not cross the single-digit mark.

One major development of last year was the entry of the Italian conferencing
giant Aethra Telecomunicazioni through a strategic alliance with Siemens's
Information and Communication Networks-Enterprise Networks (ICN EN) division
in August last year. Aethra plans to leverage Siemens' extensive nationwide
sales and service network and hopes to service clients across the spectrum-from
the entry level to advanced levels and at affordable prices.

Major Trends

One significant trend during the year was the ability of group video systems
having the ability to share data and applications. Contrary to the popular
perception, it was the government sector which remained ahead of the IT and ITeS
companies in terms of deployment. New segments which played a key role in the
growth included: telemedine, e-education, and tele-judiciary. Most of the orders
from IT and ITeS companies were primarily part of the long-term deals spilling
from the previous year.

A reasonable decline in the average price of desktop system as well as group
system drove the market during the last year. Also, FY 2004—05 saw a dramatic
improvement in connectivity owing to bandwidth availability on demand. Web
conferencing also emerged as a third segment after audio and video conferencing.
The emergence of this segment was seen by the traditional equipment vendors as
an opportunity and not a threat. In fact, both Polycom and Tandberg launched
products catering to Web conferencing segment as well.

Outlook

The market is highly under penetrated and there is a beginning realization
by both corporates and government bodies about the utility of conferencing. With
the government getting aggressive on e-governance, conferencing vendors are in
for a windfall in the coming year. Web conferencing is expected to continue to
grow rapidly due to a better user experience on account of availability of
high-speed, broadband connectivity. With Aethra entering the market, Polycom and
Tandberg can look forward to tough competition. Chinese vendors ZTE and Huawei
are also all set to make a formal entry into the market and being price
warriors, it is not good news for Polycom and Tandberg. In fact, Huwaei has
already deployed its product ViewPoint 8000 in India.

Sudesh Prasad