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SMBs untapped market for videoconferencing

Small and midsize businesses able to reap same benefits from videoconferencing technology as bigger counterparts, but barriers to adoption still exist, note analysts.
Written by Jamie Yap, Contributor

Small and midsize businesses (SMBs) are missing out on the benefits of videoconferencing due to barriers such as technology complexity and misconceptions over cost, say analysts, who add there is a significant untapped market opportunity for vendors.

There is "definitely" a market for videoconferencing among SMBs, Pranabesh Nath, industry manager at Frost & Sullivan's Asia-Pacific ICT practice, told ZDNet Asia.

In the last 20 to 30 years, enterprise videoconferencing tools have always been "very expensive and targeted at large organizations", so there was very little focus on the SMB space, if at all, he said in an e-mail interview.

But this "traditional perception" has been slowly changing, particularly in the last three to five years, as new vendors emerge in the market with innovative offerings at very competitive prices, and smaller players such as LifeSize and Vidyo which have specifically targeted the SMB segment with value-oriented solutions, he explained.

According to Nath, the SMB segment used to contribute less than 20 percent toward the global videoconferencing market. This year, it accounted for about 30 to 40 percent, and the figure will increase to between 50 and 70 percent in the next three to four years, he estimated.

Other industry insiders agreed. Claudio Castelli, Ovum senior analyst, said via e-mail that as videoconferencing gets more popular, particularly among larger enterprises, the broader adoption will increase awareness of the benefits of video collaboration and drive lower-end solutions suitable for SMBs.

Similarly, Subha Rama, ABI Research's senior analyst for enterprise communications, reasoned that since videoconferencing adoption has mostly been among larger enterprises, there is a "big, untapped opportunity" for among SMBs.

Barriers: cost and perception
On the roadblocks hindering SMB adoption, Rama pointed out that videoconferencing is not yet "plug-and-play", but a complex technology that requires substantial IT and network resources which many SMBs, particularly the smaller ones, do not have access to.

In addition, interoperability, bandwidth availability and cost are other "key barriers" to SMB adoption of videoconferencing tools, the analyst said in an e-mail interview.

Frost & Sullivan's Nath pointed to cost and awareness as the major roadblocks. The cost of running successful videoconferencing sessions is not just in the initial investment of the application, but also recurrent costs including paying for extra bandwidth, maintenance, training and support, he noted.

While overall costs of videoconferencing may have fallen in the last few years, there is still the "challenge of expensive bandwidth", especially in India and other emerging markets in Southeast Asia, which cannot be solved "overnight", he said.

Transmission and bandwidth have "always" been an issue, Nath added. If governments roll out nationwide high-speed broadband and subsidize the cost for users as well, that will eliminate much of the operational costs for SMBs to run regular videoconferencing sessions, he said.

Yet another roadblock, according to Nath, is the perception that videoconferencing is an "expensive technology". This misconception has prevented businesses from learning more about the benefits of videoconferencing.

Most SMBs do not realize that the market has changed dramatically in the last couple of years, and many companies that have implemented videoconferencing have achieved 100 percent return on investment (ROI) within a year, he said.

Benefits: savings and productivity
Nath noted that the business benefits reaped from videoconferencing deployment are the same for SMBs and larger companies. Rather than an organization's size, benefits vary according to a company's own business model and geographic reach.

According to him, there are "tangible and intangible benefits", such as reduced travel costs, improved productivity and greater collaborative culture of a company which translates to better morale and greater client satisfaction.

Often, intangible benefits have a "much deeper and long-term positive impact", but are harder to measure and therefore "less appreciated", he said.

Rama from ABI Research also emphasized that videoconferencing overall helps organizations in terms of increased productivity, and enables them to "engage more effectively" with partners, customers and suppliers--all of which have "direct and indirect ROI implications".

"[Video] is the next best thing to face-to-face interactions, and can often be done at a fraction of the cost for a face-to-face meeting, especially when people who are distributed geographically connect and collaborate," he added.

SMB telepresence adoption unlikely
Analysts, however, painted a different scenario for telepresence uptake among SMBS.

Unlike videoconferencing, telepresence aims to replicate as realistically as possible an "immersive" quality of experience in terms of participant interaction. Telepresence sessions take place in a room or suite with multiple screens and specifically configured video, audio and lighting equipment.

ABI's Rama said telepresence today is a technology for large enterprises--and even so, it has "not seen very pervasive adoption" within this target market.

Telepresence, he explained, is associated with high costs and there are issues relating to the interoperability between multi-vendor telepresence systems and non-telepresence room-based systems. Furthermore, it is a very bandwidth-intensive technology, so companies need to invest more in dedicated video overlay networks.

Rama said there needs to be "drastic cost reduction" if telepresence is to gain traction among SMBs. SMBs cannot spend hundreds of thousands of dollars on equipment and then fork out additional investment for network and management.

However, it does not mean that smaller organizations have no access to the technology. If SMBs do want to use telepresence, there are pay-per-use options, noted Rama.

Frost & Sullivan's Nath also argued that SMBs are "unlikely" to adopt high-end multi-screen, suite type of solutions since they will always be at the top-end of the market.

However, telepresence solutions have seen its technology "slowly trickle down" to less expensive systems that achieve almost the same "immersive" feel with more affordable, single-screen systems, he said.

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