Federation Bridges Video Conferencing Sales Gap

Hamstrung by tight IT budgets and global workers using mismatched endpoints, businesses are demanding flexible video collaboration that runs on mobile devices, desktops, laptops, TVs and room-based systems. But that’s not all they want platforms of all kinds to talk to one another Skype to Polycom, Facebook to Cisco, Google Talk to LifeSize, for instance. There’s little patience left for walled-garden conferencing.

Market leaders Cisco Systems Inc., Polycom Inc. and LifeSize Communications Inc. are wrapping their heads around these shifts as are some of their smaller competitors such as Avaya Inc. (following its purchase of Radvision in summer 2012) and Vidyo Inc., which was formed in 2005 with the idea of making video conferencing accessible to the mainstream. Meanwhile, their foot-dragging opened up an opportunity for video conferencing exchanges to enable proprietary and open platforms to talk to one another.

This so-called federation of video conferencing platforms, including freemium versions like Skype and Google Talk, may seem to pull the rug out from under video conferencing systems sales, but it actually could be what’s needed to finally take business video conferencing mainstream, fueling sales of systems of all types.

Rest assured, traditional video conferencing hardware is “not going away,” said Zeus Kerravala, principal analyst of ZK Research. “But, to offer a complete solution, you need to be able to deliver video any way the customer wants.”

With that in mind, the legacy hardware vendors have opened their technologies to work with some other business-to-business platforms and on some mobile devices. Avaya, as one example, debuted in December 2012 a gateway that works with Cisco, LifeSize, Polycom and Tandberg systems, and also includes plug-ins that take Aura Conferencing and Flare Experience video collaboration to Android and iOS devices. Polycom has taken interoperability even further with its October announcement of CloudAXIS, a software extension of the Polycom RealPresence Platform designed for private and public cloud deployments available in both enterprise and partner/service provider editions that enables enterprise-grade video collaboration to any business or consumer platform like Skype.  

This groundbreaking capability, however, is available already from video exchanges like Vidtel Inc., Glowpoint Inc. and Blue Jeans Network that use the cloud to federate proprietary and consumer video. For example, Vidtel hosts video conferencing meeting rooms in the cloud where people dial in from almost any device, or Skype or Google Talk. Similarly, Glowpoint’s cloud service, OpenVideo, is endpoint- and network-agnostic, and comes with encryption. It works with services including Google Talk and Microsoft Lync and, as a result, Skype. Blue Jeans Network does much the same with its online video conferencing product, which works with a number of vendors’ systems as well as mobile and Web-based video services.

The emphasis on consumer services may spark fear among video conferencing resellers. After all, why should your clients continue to buy business-grade systems when they can just use Skype on their laptops or mobile devices? Simply, it’s because consumer-grade free offers suffer from latency, jitter and lack of security. However, a video exchange or a software add-on like Polycom’s CloudAXIS can ensure quality and safety when using these consumer services.

By enabling more users to engage in video conferencing even some on free services with each other, the service increases in value and demand. Economists call it “the network effect.” Two prime examples are the Internet and the good ol’ PSTN.  Imagine video conferencing becoming as common as a phone call. Such adoption presents partners with ways to make money that were not possible with closed, single-vendor platforms.

“We believe we can actually help [the Big Three] grow their market,” said Mariette Johnson Wharton, vice president of marketing for Vidtel. Here’s why: Legacy conferencing units cost around $50,000; then there’s typically a 10 percent maintenance fee, plus the addition of the salary of the person overseeing the entire platform. That all can total about $100,000 per year. But when businesses opt for cloud video conferencing that costs around $150 per month, they can afford to buy more video phones.

“We can expand their endpoint market … especially with companies that can’t afford infrastructure,” Johnson Wharton said, explaining that channel partners for Polycom, Cisco and LifeSize can then target SMBs, a sector they, historically, have not served.

Analyst Kerravala agreed. “Cloud enables more video to more endpoints faster and easier than ever before,” he said. “That will create a ‘rising tide’ that will lift all of the vendors. Ultimately Polycom, Cisco and Avaya may lose some share to smaller vendors, but the overall pie will be much bigger, allowing everyone to grow.”

For hardware/software resellers, a new sales strategy is in order with selling cloud-based federation. “Partners need to understand how to position themselves and be a trusted adviser,” said Ron Myers, senior vice president of worldwide channels for Polycom. “I think they have to understand how to sell a service.”

They also need to be less brand-centric when recommending endpoints, evaluating instead the appropriate cost/value for the user and application.

“The biggest thing partners have to get over is the size of the deal,” said Mary Friel, senior vice president of business development and channel sales for Glowpoint. This could prove difficult for resellers used to making quota quickly on large hardware deals. Federation services are sold as subscriptions with smaller monthly payments, which takes longer to build, but also can lead to additional services revenue. “You enable the customer, get them to buy into video as an effective business tool, then they start to realize, ‘I don’t have the capabilities to manage this environment,'” Friel said. That’s where you come in with managed services, creating another recurring revenue stream that, subsequently, expands the initial deal size.

Indeed, most end users don’t have the time for or interest in managing their video conferencing systems themselves. “The growing market for video communications and services spells opportunity for channel partners who can offer installation, integration, configuration and maintenance services,” said Henry Dewing, principal analyst at Forrester Research. 

Kelly Teal is senior editor of Channel Partners.
Twitter: @kellymteal
LinkedIn: linkedin.com/in/kellyteal

MORE INFORMATION

Hear more about video conferencing federation in the session, “Desktop Video Collaboration,” at the Channel Partners Conference & Expo, Feb. 27-March 1, in Las Vegas.