Enterprise Equipment: Audio-Video Conferencing: All Round Growth

Over the years, the 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 real presence
teleconferencing, catering to diverse segments of the enterprise. The country's
video-conferencing endpoints market has seen phenomenal growth year-on-year,
mainly because of a government-led program to develop an Internet protocol
infrastructure. This has resulted in increased availability of broadband, and a
significant reduction in communication costs.

The conferencing market is moving toward higher quality products such as high
definition conferencing and telepresence. It is relatively new phenomenon of
video communication that enables users to be able to communicate and collaborate
in a virtual environment, giving an almost real experience.

The growth of the overall Asia Pacific videoconferencing endpoints markets is
expected to be led by the corporate sector, where converged voice, data, and
video solutions are likely to have their strongest appeal, primarily as
productivity tools for knowledge workers. According to VOICE&DATA estimates, the
total market for audio-video conferencing products and solutions during 2006-07
was Rs 100 crore. In terms of units, 4,000 videoconferencing units were sold.

The Players

Polycom continued to enjoy the leadership position with about 50% market share,
and total revenue of Rs 50 crore. In the audio conferencing market, Polycom has
91% market share. Over the years, Polycom has forged major distribution
alliances with Bharti Teletech in FY 2006-07, with an aggressive focus on the
Indian market. Government verticals contributed hugely to Polycom's revenue.
Polycom has also aligned its channel and distribution strategy to reach out to
the SMB and SOHO segments.

It made efforts to increase its presence from sixteen cities to thirty-two
cities targeting the SOHO segment. It also strengthened its distribution
partnership, and devised a retail strategy to increase its presence in the
country.

In FY 2006-07, European vendor Tandberg stood at second place with 24% market
share, and revenue of Rs 24 crore. Italian conferencing giant Aethra
Telecomunicazioni made substantial inroads into the market, clocking a revenue
of 14 crore. It was able to garner 14% market share. It has distribution
alliance with Siemens wants to expand its clientele across the spectrum from the
entry level to advanced level at affordable prices. Aethra has significant share
in the banking segment, and for the next year it is expecting significant
results in the government verticals such as NIC, NHAI, defense etc. It aims for
40% of the Indian market share, and plans to introduce new product range in
India. Revenue of other players such as Sony, and Vcon could not cross the
single digit mark. Avaya, which markets Polycom, and Sony earned Rs 39 crore in
revenue in this fiscal.

Latest Arrivals

This year, two major players are entering the Indian market, the most
significant being Cisco. Cisco has introduced, telepresence meeting solution,
which offers life-size images of meeting participants, high-definition video
(1,080 pixel), and spatial audio. The full-duplex near-zero latency allows users
to communicate in real time. Cisco has recently acquired Webex, and Latitude,
which provides additional know-how of a very competitive market. Cisco's
telepresence solution is generating a lot of interest in the market, and it has
already got few big orders. The latest entrant in the market is Lifesize, which
has got high definition videoconferencing endpoints. It has a tie-up with
Radvision for MCUs. In August 2006, it established its subsidiary in India, and
also announced engineering operation in Bangalore. The Bangalore design center
focuses on software development, and contributes to engineering efforts across
the company's high definition video product line.

The Buyers

The traditional buyers are the corporates, especially the IT and ITeS
segment. But, now the conferencing market has diversified into different other
areas. The most important buyer for conferencing solutions are service providers
(Reliance, Bharti, and VSNL), who are into providing videoconferencing services
along with the bandwidth. The BFSI segment aggressively invested in conferencing
solutions in FY 2006-07. Major buyers were RBI, UCO Bank, Indian Bank, Canara
Bank, Punjab National Bank, SBI, and Syndicate Bank. And cost savings. Another
major vertical which pushed up the conferencing market this fiscal, was
pharmaceutical companies. Like banks, pharma companies have very wide
operations, propelling the demand for conferencing solutions.

Educational institutes are increasingly becoming a major area for solution
providers. Increased cost of education, and demand for doorstep service in
education have led to a boom in distance learning, resulting in adoption of
conferencing solutions in the sector. Telemedicine also saw a lot of interest in
it. Shortage of doctors, high specialization needs, high cost of medical care,
and remoteness of patients have led to the booming market of telemedicine in
developed countries, which is increasingly being outsourced to countries like
India. This has resulted in increased demand for conferencing solutions. On the
domestic front India is facing a problem in providing medical care to the
masses, particularly in far-flung areas. Now, with the increased availability of
broadband services even in smaller towns and cities, it has become possible to
provide telemedicine services to these remote areas. The government and private
hospitals are contemplating the idea of providing these services to offer better
and specialized health care facilities to patients.

Defense vertical has also invested in conferencing solutions. Increasingly,
service providers are focusing on this vertical. Need for real time
communication between command and frontline force has led to this, and we will
see increasing interest for future deployment of conferencing solutions.

The latest and expanding buyers are the state governments that are building
their SWANs (State Wide Area Network). With increasing interest and pressure on
the various state governments to provide transparent and efficient
administration, they are aggressively investing in e-Governance.

Bright Future Ahead

Globalization is happening fast, and communication technologies are
helping to eradicate geographical boundaries. Video is gaining importance due to
cross-cultural engagement between employees and organizations. As convergence
brings voice, data, and video onto the same network, new technologies are
rewriting the rules of collaboration. In the past, videoconferences, in
particular, have been difficult to set up, challenging to use, and frequently
unsatisfying in its ability to replicate in-person meetings. To improve this
situation, companies are working on new technology that delivers a unique,
in-person experience over the converged network. In the coming years, cost of
ownership will reduce, maintenance of infrastructure will not be a burden, and
the general perception that people had about conferencing as a luxury will
slowly be dying. Also, with the wide scale adoption of ICT technologies, we are
headed for a bright future. Globally, with the onset of 3G videoconferencing as
well as increasing popularity of software-based solutions and interest in
enhanced collaborative tools, the markets are providing vast opportunities for
growth, as videoconferencing is increasingly offered as part of the product mix
by solution providers. While developments in telemedicine, distance learning,
and e-Governance are also likely to contribute to the spread of video as part of
unified communication solutions, there is strong evidence that point-to-point,
standalone videoconferencing solutions are expected to disappear, as the shift
to IP accelerates, and vendor partnerships continue to drive the convergence
landscape. IP has made it possible to extend the communication privileges to
every nook and corner of the world. Potential applications would span across
areas like boardroom meetings, corporate conferences, high-end surgeries,
operation theaters, education and distance learning, etc. 

In terms of technology innovation, convergence and collaboration technologies
will be taking off in the coming years. More and more enterprises will move to
IP-based platforms from existing ISDN, and the need for mobility technologies
would increase.

However, the industry faces some challenges. Though they are increasingly
being eliminated, they need more attention. Taking into account the convergence
of IT, media, telecom, and consumer electronics needs, a modern and efficient
telecommunications infrastructure should be created. Management of interface
support is another challenge. There exists number of standards; separated
communications and conferencing technologies reside on different networks and
platforms, requiring different management interfaces for support.
Standardization is yet another area of concern. Most of the communication and
collaboration technologies are proprietary platforms that did not integrate with
the existing network infrastructure. It will be important for companies to focus
on increasing the overall pie rather than just fighting for the market
available.

Nilabh Jha

nilabhj@cybermedia.co.in