Netviewer aims to outshine WebEx in Europe

One of Europe's largest indigenous SaaS players is NetViewer, a web meetings rival to US players WebEx and Citrix Online. NetViewer is pursuing partnerships and a freemium strategy to win market share, but is its hybrid SaaS/on-premise strategy a winner?
Written by Phil Wainewright, Contributor

With more than 15,000 customers in 55 countries, one of Europe's largest indigenous SaaS players is Germany's Netviewer. Its online meeting platform is a rival to well-known US names such as WebEx (part of Cisco) and the GoToMyPC/GoToMeeting products from Citrix OnLine. Already the number two web meetings player in Europe in 2007 (according to market researcher Frost & Sullivan), the company added venture backing last year from Deutsche Telekom subsidiary T-Online Venture Fund and European Founders Fund, the investment vehicle of Internet luminaries the Samwer brothers. I had a chance a couple of weeks ago to connect with Netviewer's founder and CEO, Dr Andreas Schweinbenz (pictured), to find out more about the company's plans.

It's still early days in the growth of the European market for web meetings, he believes, and pointed to a Gartner chart on which the European market value of $378.9 million in 2008 just happens to equal the US market value of $378.2 million in 2003. Considering the total GDP of the economies are roughly equivalent, that suggests the European market is around five years behind the US.

Another interesting comparison I'd add is to look at the US players back in 2003. WebEx already had a dominant 50 percent share with revenues of $189 million, but privately-held ExpertCity, which became Citrix Online on acquisition in February 2004, made somewhere in the $20-30 million range. Netviewer is about the same size now, based on its published accounts for 2007 (the latest available under German rules for privately-held companies). It reported gross income of €14 million in 2007 (around $20 million at the prevailing exchange rate). Citrix financial statements for 2008 show that in the five years since 2003, its online services subsidiary has grown to become a $260 million-a-year business. If Netviewer can rival or better that 10x growth over the coming five years, it has a rosy future ahead of it.

Unlike Citrix Online, Netviewer has decided against continuing to focus its efforts on the remote support market — even though that's where it started out. "We see the larger market in the future is the meeting area," explained Schweinbenz. That choice, incidentally, avoids crossing swords with Europe's other significant player in this sector, Spain's NTRglobal, which is concentrating on remote support rather than Web meetings [disclosure: NTR is a recent client, WebEx has also been a client].

Netviewer is in no hurry to take its wares to the US market, either. "Let's not get de-focused by trying to expand internationally too soon," said Schweinbenz. Its clear target is to be the European number one in web meetings. "The online meeting business is still in its early stages," he said, and growth is rising: "The economic crisis is pushing the market because people want to save money."

The company has several initiatives under way to accelerate growth. The first is a partnership strategy to encourage vendors to embed its web meetings and support technology in their applications and services. Netviewer has released an SDK and partners who have already adopted it include Swedish online collaboration provider Projectplace, the Siemens OpenScape unified communications platform and T-Mobile. Schweinbenz cited several other European telecoms providers at various stages of adoption. "More and more customers are discovering the unified communications and collaboration model," he said. "The market is getting off the ground at the moment."

A second initiative is a freemium distribution strategy that offers the web meeting and remote support products as free downloads for personal and home use. "We decided to take away all the hurdles," said Schweinbenz. This is putting Netviewer on free download portals and significantly extending its market reach. Of course it opens up the potential for unlicensed use by businesses, but the scope for this is limited by the fact that everyone participating in a session will see that it's licensed for personal use only, which Netviewer believes will deter most legitimate business users from freeloading.

The company is also pushing the envelope of its technology in ways that impressed me; meeting sessions support simultaneous live Web video and VoIP channels, for example. Netviewer is also experimenting with an online live video platform called Netviewer Present. An early user is rc-hobby.tv, a website dedicated to remote-control model aircraft.

In developing these and other initiatives, the advice of their recent investors has been helpful, said Schweinbenz, who insists Netviewer had funding thrust upon it at the behest of its long-term partner T-Mobile rather than proactively seeking it. "We did not [take investment] because we needed money," he told me. EFF's experience with online businesses has been particularly valuable, he said. "That has paid off for us already."

One element of Netviewer's strategy that contrasts starkly against those of its US competitors (and is closer to Microsoft's) is that it offers on-premise licensing as well as its online subscription service. "You cannot separate the two things in our opinion," Schweinbenz told me. Although customers are happy to start off with just a few users on the online service, he said, "once they reach a certain number of seats, they ask for an on-site server."

Customers go on-premise for two main reasons, he explained. First of all, they're concerned about the confidentiality of their data and therefore prefer to keep internal meetings on their own private networks. Since most of Netviewer's technology advantage is in the codec algorithms in its client software, its online infrastructure doesn't significantly impact the performance either way. Secondly, customers find it easier to integrate an on-premise server into existing workflows and business systems, including rights management, CRM, ERP, helpdesk systems and so on. A final factor is the straightforward lack of confidence in a relatively small and unknown vendor. "We still have to educate the market," Schweinbenz concluded. "The SaaS model is actually our favorite."

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