Videophones, Round 3: Finally as easy as picking up the phone?

Market strategy. Vonage and Time Warner Cable, whose Northeast Ohio division became the first cable MSO to market the Viseon Visifone in September 2004, share the same target market —the small and medium enterprise (SME). Because videoconferencing works best with isochronous or equal upload/download speeds, current provider-imposed bandwidth limitations on consumer upload speeds make the SME market appear more attractive. Vonage’s announcement notes that the service will allow "small business customers to benefit from corporate-quality videoconferencing." But corporate customers prefer group conferencing systems over videophones, and the potential market size for single-person business videoconferencing systems is tiny compared to the potential general consumer user base for single-person videoconferencing systems.

Most businesses prefer group videoconferencing systems for three important reasons. First, limited bandwidth dedicated to videoconferencing means that group systems lower the number of end points required on a call, which in turn equates to lower overall bandwidth requirements per location. Group systems, in turn, mean lower cost per system as well, since multipoint control units (MCUs) are typically cost-inhibitive for SMEs on a per-port basis. Third, group systems provide higher participant interaction and efficiency, allowing members of a local group to have "sidebar" conversations during a videoconference.

Consumer behavior. Some products reach the market through uses other than the "intended use" that the service provider or manufacturer may have envisioned. Personal behavior played a much larger role in the mid-1990s rejection of videophones, but its role was masked by the small market size of those who actually adopted the expensive, underperforming units available at that time. Three comments have been voiced consistently in online forums by customers and potential customers of videophones.

The first is summed up succinctly by a recent post by a business person who commented on the Vonage announcement by saying, "Do I really want to see the person I don’t want to be talking to in the first place?" In other words, is there a true value for one business person to see the to another business person, especially on a very small screen? In early point-to-point videophones equipped with small screens and fisheye or wide angle lenses, each participant was forced to lean close to the desktop phone to see the other participant, resulting in some humorous images since early phones used wide-angle camera lenses. While these images may be acceptable to consumers who would mount the oversized videophones on a wall and hold the baby up in front of it from grandmother to see, very few business users will benefit from either a wall-mounted scenario or the "big nose syndrome."

The second comment is that videophones inhibit mobility, much the way that traditional desk phones have been augmented or supplanted by mobile or cordless phones. The mobility comment has become more consistent as the average SME business user has greater flexibility of movement with wireless LANs and mobile telephony. The ability to move around an office, even with a traditional desk phone, has been addressed by aftermarket vendors such as Hello Direct. But no option yet exists for remote videophone connectivity or wireless videophones, although it does already exist at equal quality in a webcam/laptop combination (such as Apple’s iSight/Powerbook/iChat AV combination that has been available for almost a year and is due for a multipoint update in the first half of 2005).

The third comment, dating back to the early 1990s before the advent of Round 2 videophones, was the request to receive content of value (i.e., not talking heads) but not to be required to send video back. This comment stemmed from research done by research groups such as ForwardConcepts that found business users—given limited bandwidth—would choose to prioritize use of a conferencing or collaboration system as data/graphics first, followed closely by voice, with video coming in a distant third. Viseon’s Visifone included NTSC and PAL video inputs, which provide the capability of sending any video signal in lieu of just the videophone camera. If the new version also includes this capability, along with the benefits of H.264 and SIP, it just might win over the SME market.

So will Round 3 look any different from the first two rounds? Will the arrival of products from Viseon, WorldGate, and others provide a decisive KO or just another few months of sparring before videophones go back to the corner for another few years of rest before Round 4? We’ll just have to wait until CES to see.