Well it could be on the rise and perhaps proof of that is seen in the news today that Cisco finally acquired control of Tandberg with over 91 percent of its shares purchased for approximately US $3.4 billion after much investor wrangling.

Prior to the Cisco acquisition, Tandberg’s stock value was on the rise (see above) as video conferencing has long been viewed as a solution that can offer value, cost savings and more efficient way to conduct business. In my opinion the dip in the global economy was only a catalyst for a technology that was already making inroads into major corporations, government and educational facilities.

Only a few weeks ago LifeSize, another video conferencing provider with a strong play in the SMB market, was acquired by Logitech for $405 million. LifeSize was a privately held company and “expects approximately $90 million in revenue in 2009, with 2010 revenue expected to grow between 40 percent and 60 percent.”

While we eat our own dog food here at GIPS – utilizing both HD voice and HD video – there are hundred of industries and millions of companies that could benefit greatly from video conferencing outside of the traditional office space that still haven’t used video conferencing. I’m just looking forward to the day I replace my home phone with a video device.

It’s no secret that GIPS is focused on real-time IP voice and video communications. We are always watching market trends. This morning was no exception. I was going through the latest Cisco Visual Networking Index (CVNI) and noted with interest that, among other things, IP traffic in the Middle East and Africa will reach 1 exabyte per month by 2013.

According to the CVNI, at a CAGR of 51 percent from 2008 to 2013, Africa and the Middle East will exhibit the highest growth of any market in the world. The next highest growth will be in Latin America at 50 percent, Central Eastern Europe at 49 percent, and in fourth place, Asia Pacific at 42%.

I poured a cup of coffee and sat back to consider these market statistics for a moment.

Then it happened. An article on my news feed grabbed my attention. The headline was: “Pigeon transfers data faster than South Africa’s Telkom”.

For those of you who care, Telkom is South Africa’s leading Internet Service Provider (ISP) with annual revenues of almost $1.0 Billion USD and about 1.8 million subscribers. The economy of South Africa is Africa’s largest. Internet speed and connectivity are poor because of a bandwidth shortage. It is also prohibitively expensive.

The test was performed by Unlimited IT, a call center operator that has grown increasingly frustrated with the speed and capacity of the Telkom internet infrastructure.

You’ll be pleased to know that the 11-month-old pigeon, “Winston”, took one hour and eight minutes to fly the 80 km (50 miles) from Unlimited IT’s offices near Pietermaritzburg to the coastal city of Durban. He had a data card strapped to his leg. When he got there, his handlers leisurely downloaded the data and accomplished the entire file transfer in two hours, six minutes, and fifty-seven seconds.

The article goes on to say that Unlimited IT had transferred only four percent (4%) of the data over the Telkom network in the same period of time. Presumably this means that if everything stays linear, “Winston” was 25 times faster than the Telkom network. Let’s give a shout out to “Winston”.

Incidentally, the article also mentions that “Telkom could not immediately be reached for comment.”

I think it’s time for Winston to carry another message. Naturally it will be addressed to Telkom management.

Carol Wilson wrote a good piece today about the need for telepresence interoperability. She claims that, although Cisco appears to be dragging their feet in offering a solution that interoperates with other major players, it is really up to service providers and end users to demand open solutions.

I found the article especially interesting in light of a webinar that Cisco sponsored on the topic of desktop video conferencing a few weeks back. Mike Sonnier, the presenter from Cisco, spent quite a bit of time discussing the need for interoperability in the video conferencing market. In one sense, it makes total sense that Cisco would be more concerned with interoperability on the desktop vs. telepresence. Telepresence requires a captive audience in an expensively appointed room used only for video conferencing. The sheer overhead cost of the solution dictates that Cisco would want to sell as many rooms as possible while making sure that all participants in a given call were in Cisco-enabled rooms. However, the ubiquity and mobility offered by desktop solutions, combined with users’ expectations and the relatively low cost per unit, would mean that interoperability is likely to come sooner to the desktop. 

Whether it is on the desktop or in high-end telepresence solutions, most of the technical hurdles to interoperability have been overcome, even if the business case isn’t quite there yet. However, the different video conferencing players still need to agree on which standards to support. In order for disparate systems to interoperate, as I see it, there are 3 technical components that need to be shared by each side of a call. First, each side needs to be able to establish a connection with the other by using the same call setup protocol.  This had been an issue for quite some time, but once Cisco launched Call Manager 5.0 in 2006, it became apparent that SIP was truly the standard that everyone needed to support. The second component that video conferencing solutions need to share is a video codec. In order for each side to see the other, they need to be able to encode and decode images using the same technology. While it is still evolving, and there are certainly plenty of proprietary options available, it seems like H.264 is the codec of choice for the foreseeable future.  Finally, just like with video, vendors need to supply solutions with the same voice codec on each end of the call in order to interoperate. Even though telephony, and VoIP in particular, is much more mature and has been around longer than videoconferencing, there are a slew of voice codecs available to vendors, making the decision of which to integrate a difficult one. Videoconferencing providers can certainly just integrate every codec available in the hopes that the other side will support one of the options, but it is much more cost effective to agree on a small number of codecs and avoid unnecessary licensing costs. The telephony world decided on two standards long ago (G.711 and G.722), but the market for the HD (or wideband) voice codecs that are necessary for video conferencing is like the Wild West right now. 

In light of this need for agreement on which HD voice codec to support, GIPS is sponsoring a webinar Tuesday, July 14 titled, “It’s All Gone HD: Overcoming the Hurdles to Supplying HD Voice and Resolving the Codec War”. To register for the webinar, visit the USTelecom site here.

In a recent interview with Telephony online’s Carol Wilson, I heard her articulate a term I had not heard in a long time: “a rising tide lifts all boats.” It’s rather an appropriate term for the growing real-time video space. As I wrote in my post last week, video communications traffic is set to increase tenfold by 2013 – according to Cisco. Given that situation, bandwidth could become an issue for consumers, service providers and application developers who may well be interested in ensuring their video usage is both optimal for their networks and usage.

While the number of video conferencing and video application products out in the market is increasing (whether it’s peer-to-peer or multiparty video conferencing) it will benefit all of the industry players involved, as usage grows- hence the term ‘a rising tide lifts all boats.’

As more users increase their experience and familiarity with video conversations, it will become a more common everyday-experience, both in the workplace and home. This has already started to happen with a younger generation entering the workforce who is accustomed to communicating with instant message text, VoIP calls and video.

However, in conjunction with this shift it will not be long before end users become far more discerning. For those businesses that offer a sub-par video experience it will not be long before customers migrate to a better solution. (So, yes look out for GIPS supported video)

I liken it to the iPhone experience – a mobile phone was just that for most consumers until Apple entered the market. The user experience and the quality of the experience pushed Apple’s competition to offer consumers better smartphones in general, especially as customers were migrating to AT&T – the exclusive US provider for iPhone. Growth has been explosive for the iPhone – it has generated increasing data revenue for AT&T. Last quarter alone, AT&T wireless data revenues were up nearly 40 percent to $3.2 billion.

So as the video experience improves, whether it’s on a personal computer or a mobile phone watch for the migration to the best quality experience.

Last week, Michael Finneran at Unified Communications Strategies reported on a new partnership between HP and Microsoft aimed at claiming a larger stake of the UC market. According to an announcement at Interop in Las Vegas, the companies will invest $180 million in professional services, joint marketing, and tighter integration between HP hardware and infrastructure, and Microsoft software.

The move seems calculated to challenge Cisco for UC supremacy, so it should come as no surprise that Cisco today announced efforts to beef up its UC offering.  The world’s largest networking company will roll out new IP phones, provide expanded WebEx service and allow easier access to technical support. 

Cisco’s most significant plans, however, include expanding Telepresence support and tighter integration between video conferencing platforms. There has been a lot of talk about whether Microsoft or Cisco will be the dominant player in the estimated $34 billion UC market. Cisco has a stranglehold on the networking and telephony space, while Microsoft is the unquestioned leader in enterprise software. As communications become more unified, these worlds begin to overlap. Microsoft’s strategy to this point seems to be to partner with hardware/ infrastructure companies (HP and Nortel) that round out their offerings, while Cisco appears to be acquiring software vendors to provide desktop solutions. Nowhere is this more apparent than in videoconferencing, with a focus from both camps suggesting it is the frontline of the UC battle. HP already challenges Cisco in the telepresence space with its Halo solution, while Cisco’s acquisition of WebEx in 2007 signaled it was serious about desktop conferencing and collaboration.

Cisco’s acquisition strategy would seem to indicate more control of innovation and technical roadmaps, possibly coming at the expense of time-to-market.  On the other hand, as Finneran points out, the key for HP (and really any company Microsoft partners with) “will be to make the whole more than the sum of its existing parts”. While each strategy has its strengths, the winner of the UC battle may ultimately be determined by who offers the best conferencing solution.

Tradeshows are on my mind right now – as GIPS is gearing up for the GSMA Mobile World Congress in Barcelona. GIPS will be demonstrating its latest video technology at the show and we’ll also be attending a number of events connected to the show. While tradeshow numbers may be affected, over 50,000 people are still expected at MWC.

On24, a webcasting and virtual solutions company released a survey earlier this month, which surveyed 10,000 people on their tradeshow plans. Some of the results stated:

“A full 76 percent said their company has already begun using virtual events (53 percent) or plans to begin using them (23 percent) to supplement some of their physical events in 2009”

While virtual meetings are convenient and cost-effective there is a lot to be said for meeting customers or vendors in person. However, with relationships already established virtual meetings or video conferencing is a huge plus and can really help accelerate the pace of business.

Internally at GIPS, we use our video conferencing technology to collaborate with our colleagues in offices around the world. With video, it is possible to connect with people at a much higher level than via telephone and a lot more can be accomplished and understood during a video conference call. A recent study from Pearn Kandola commissioned by Cisco points out that Video changes everything in business communication.

“Video can help accelerate relationship building with ‘high context’ cultures such as China, Japan and Middle East, where relationships are based on integrity and social interactions. Countries such as Germany, Sweden and Denmark are characterized by their ‘low power distance’ culture, meaning that colleagues generally relate to each as equals, regardless of formal positions…” Here at GIPS we have people from all over the globe – and using video has helped us all work more productively.

We also use Citrix’s GoToMeeting or GoToWebinar –a customer of GIPS. Training and operational costs are decreased with less travel. Colleagues can also present and demonstrate applications in real time to customers, prospects and other employees in our offices around the world.

There are predictions that both virtual meetings and video conferencing will increase, and if that’s true it sounds and looks like good news.

As Om Malik points out, this is yet another piece of technology that will help Cisco compete with Microsoft in the UC space. The discussion of Unified Communications tends to revolve around the importance of presence. While I do not disagree, I think the most important mode of communication for most people, especially in the enterprise, is through email.  If anyone wants to create a successful UC application, they will have to maximize the potential that email offers and develop something that integrates seamlessly with Outlook. 

In addition the importance of search to UC and the world at large should not be overlooked. One of the shortcomings of many strains of economic thought based on rational choice theory is that they fail to take into account humans’ limited cognitive abilities. While people may want to maximize their utility, they are rarely able to gain and process all the information necessary to do so. If you disagree, just go to a convenience store, and in under 30 seconds try to pick the one energy drink from the dozen or so choices which will perfectly match your preferences. It’s not easy.

The point is that the ability to organize information is paramount to effective communications. Imagine where the Internet would be without Google. Information is virtually useless if there is no way to efficiently sift through it and extract what is truly relevant and important. This same principle applies to Unified Communications. If we are going to seamlessly integrate voice, video and data, we will need to provide a way to organize any information that is extracted in these interactions. Hopefully Cisco’s involvement with Xobni is a sign of things to come and and will lead to some ground breaking developments down the road.