One of the strongest-growing segments of the on-demand sector is web conferencing. Category leader WebEx is a $350 million-a-year company based on its most recent results, and growing at a consistent 24% annual growth rate. Coming up fast behind is Citrix Online, currently posting a $120 million-a-year run rate but growing at more than 60% annually. Other significant players include Raindance (acquired in February by communications outsourcing group West Corporation) and Microsoft Live Meeting.
The sector as a whole probably totals close to $1 billion in annual revenues, and it's a rapidly expanding category. There's still plenty of untapped market potential to realize, as WebEx's VP of corporate marketing, Van Diamandakis, recently told me: "Only 20-30% of the US market has heard of online conferencing."
One of the smaller players has been Macromedia's Breeze product/service, but all that is set to change in Mid-November, when Adobe (which acquiried Macromedia last year) releases Acrobat 8, as reported today by CNET's Martin LaMonica:
"Adobe will launch a hosted service called Acrobat Connect, which will allow individuals to click on a button in a PDF file to start a Web conference."
"... Connect is a rebranded edition of a Web conferencing product formerly called Macromedia Breeze.
"From a PDF file, a person can use Connect to let someone else view a document or a person's entire desktop through a Web browser. Connect, which runs with the Adobe Flash Player, also lets a person start a chat with instant messaging or send an invitation via e-mail.
"For individuals, Adobe will host the service, which will cost $39 per month or $395 per year. The service is slated to launch in mid-November."
That price point is aggressive. Citrix OnLine's GoToMeeting charges $50 per month, while WebExOne's MeetMeNow, its entry level service, is priced at $49 per month. Neither of them has a sub-$400 annual fee. Of course, those established providers will argue that 'you get what you pay for'. WebEx in particular majors on the strengths of owning its own network. Citrix argues that its data centers are designed to maximize the performance of native Internet connections. Adobe, on the other hand, spoils its pitch by also offering an on-premises version that enterprises can deploy in-house. How serious, then, will it be about its hosted service?
In its favor is the sheer ubiquity of the Adobe Acrobat format, which is the perfect vehicle for overcoming the market ignorance cited by WebEx's Van Diamandakis. Perhaps users will try it and then decide they want to pay for a better supported service. But somehow I doubt it. I think that the arrival of Adobe in the web conferencing market is going to depress the price that vendors can charge for that service and therefore will challenge the business models and profitability of the existing vendors.