The problem with the telepresence picture

Cisco has set itself a tough sales target for its TelePresence videoconferencing suite.

Chief executive John Chambers said in August 2006 that the networking specialist planned to earn $1bn (£500m) from the product in the next five to seven years. It's been slow going, however, with Cisco selling just 24 units in Europe up until January this year, 15 months after the videoconferencing suite's launch.

David Molony, principal analyst of the IP enterprise team at Ovum, calculated that there are currently between 225 and 300 high-end videoconferencing, or telepresence, system customers worldwide, totalling the figures from the top five vendors: Cisco, HP, Polycom, Tandberg and Teliris.

The lack of sales, however, isn't due to a lack of quality. The technology offers an incredibly rich video experience and there is the potential for organisations to integrate it with the rest of their IT infrastructure.

"It's very impressive," said Molony. "The quality is so good. And there is the ability to do unified communications: video integrated with voice and data, all in one environment."

Molony predicted that many businesses will buy a telepresence offering this year and that the number of sites with a telepresence room will quadruple by 2010, albeit from a small base.

So, if the quality is there, what has stopped businesses buying the technology so far? 

Firstly, many businesses will have been put off by the price tag. Cisco's three-screen offering costs $300,000, Polycom's costs from $200,000, and HP's costs $349,000, following a recent 36 percent cut in the list price of its product. Those costs are per site and are exclusive of installation and ongoing service costs, meaning they are only affordable for the largest corporate organisations.

"The cost and the footprint required make it of greatest interest to the largest companies," said Ira Weinstein, partner and senior analyst with Wainhouse Research. "It's a Fortune 5000 play."

With HP making the first move with its price cuts, that looks set to change. As sales increase, so vendors' costs will drop, leading to more price-competitive offerings, according to Weinstein.

"We will see costs coming down," he said. "The flavours [of telepresence] will change to make it more appealing to [SMEs]."

Another factor which might help affordability is the provision of telepresence as a managed service.

The managed-service concept is in its infancy, with many still watching the development of the technology, but there have been two announcements of note: Regus has installed TelePresence at some of its serviced offices and it now rents those TelePresence rooms to its clients; and BT is developing a service around Cisco's offering.

One of the advantages a telco could bring, in terms of a managed service, is the ability to form a bridge between different vendors' systems, so, for example, a business on a Cisco system could hold a telepresence call with a company on a Polycom system.

Proprietary lock-in
The issue of interoperability has so far proved thorny.

Businesses can usually now get their telepresence system to talk to a non-telepresence system, particularly if both are based on the H.323 audio-visual standard, which most are. Of course, a vendor's various telepresence systems will also communicate with each other.

But, with a small number of exceptions, the result of trying to get one telepresence system to communicate with another vendor's telepresence system will be horribly unsatisfactory.

"Telepresence-to-telepresence interoperability is tougher," said Weinstein. "If you get connected, you won't have a good telepresence experience because you will have to work to the minimum [common] standards."

As well as price and interoperability concerns, another big issue is bandwidth: at 5Mbps per screen, it doesn't take long to fill most companies' wide area pipes.

"You need to make sure the network is up to the task," added Weinstein. "Be prepared to pay for a dedicated overlay network from the vendor. If you push back [at the vendor], you could be sacrificing the experience [of the conference]."

Supporting the wider IT strategy
Molony advised that businesses should spend considerable time working out the financials before committing on any telepresence investment. "You should have a very strong business case. It's more than a simple ROI," he said. "You've got to think of it as part of the business's technology roadmap. Does it fit with your IT strategy? Do you have a strategy for unified comms?"

Though vendors' equipment used to vary considerably in terms of support for multipoint conferences and the bandwidth they used, for example...

...products have become increasingly similar as they have developed. There are still some differences in terms of the number of screens, the way they handle multi-party calls and the quality of video and audio, however.

Weinstein noted that telepresence was currently still a separate offering from the rest of IT, because it requires its own dedicated room and network resources. He said vendors were taking strides to provide better integration with companies' IT infrastructure.

In terms of the future, Weinstein said the ultimate goal was "anything to bring telepresence into the rest of the communications world. Telepresence is one type of communications tool in the arsenal," he said. "Over time, it will take its rightful place there."

Ray McGroarty, solutions marketing director for Polycom EMEA, envisaged that the future will bring three key improvements to telepresence technologies.

Even though current systems already offer 1,080-pixel screen resolution, McGroarty said that figure will continue to rise over time: "It's ever increasing." Voice quality is already excellent, so there could be little room for improvement there, he said.

Secondly, McGroarty said that vendors are developing techniques for "filling in" dropped packets. This involves predicting the information contained in a missing audio or video packet and presenting the estimated information to the user, instead of there being a glitch in either the audio or video.

Given time, telepresence may become the best videoconferencing technology yet. It just needs wider acceptance, lower prices, better interoperability and some faster networks.

A telepresence timeline

• 1924: "Telemedicine" made its public debut, albeit in a very primitive form. Radio News magazine featured a doctor examining his patient on a radio set equipped with a screen
• 1960s: Nasa started sponsoring telemedicine trials for Native American communities, as well as astronauts
• 1993: Teleport, the first commercially successful telepresence company, was founded. The technology, and the networks to support it, were extremely limited by current standards
• 2000: The Scottish Centre for Telehealth established its first venture into telemedicine, using ISDN for connectivity
• June 2001: Teliris brought to the market the first telepresence offering recognisable by current standards. The company later impressed venture capitalists at Fidelity Investments, which ploughed $40m of funding into the organisation
• September 2001: Videoconferencing usage leaps as the terrorist events in New York cause many businesses to sharply cut back on travel
• December 2005: HP launches its telepresence product, Halo Collaboration Studio, and signs up Pepsi, Canon and General Electric as customers
• June 2006: Cisco chief executive John Chambers, in advance of the launch of TelePresence, claimed the technology will make a billion dollars for the company in five to seven years' time
• October 2006: Cisco launched its TelePresence offering, utilising the 26 patents it holds on the technology
• January 2007: HP formed a marketing and interoperability partnership with Tandberg to tackle Cisco's entry into the marketplace
• March 2007: Five months after TelePresence's launch, Cisco revealed its first customer, Germany-based Media Saturn
• June 2007: BT is accredited to sell Cisco's systems, becoming the networking giant's largest distributor in the UK. BT has since made a considerable sales and marketing effort to position TelePresence alongside its legacy conferencing offerings.
• October 2007: LifeSize launched a competitor to other vendors' telepresence offerings, costing a fraction of the price. Its system is far more basic than those of the largest vendors, but still uses high-definition images
• December 2007: Cisco announced it would open up TelePresence to allow interoperability with other vendors' systems. This was brought about partly by the company's decision to support the H.323 communications standard. However, while the Cisco kit interoperates with legacy conferencing systems, it still struggles to work with other vendors' telepresence equipment
• January 2008: Polycom buys Destiny Conferencing, originally known as Teleport. Destiny Conferencing's equipment provides much of the foundation of Polycom's current telepresence offering. Also in January, the Scottish Centre for Telehealth announced an Aberdeen trial of telepresence technology
• February 2008: Organisers pulled the plug on Britain's first telepresence conference. Telepresence World had been sponsored by many of the largest telepresence suppliers and was due to have been held in London in March. The organisers declined to comment on their reasons for the cancellation beyond the placing of a short apology on their website. Also in February, HP slashed the price of its telepresence offering by 36 percent