Telepresence: Will it Beat the Heat?
Date: Wednesday , December 31, 2008
Picture this—Six executives of a global company are sitting in their conference room, three on each side of a table, deeply engrossed in a discussion and frequently banging on the table, which has a clear glass panel running down its center. Surprisingly, if you look closer – only three are physically present in the room, in this case in New Delhi. The others could be sitting in their U.S. office at San Jose, or anywhere else, but their life-size, high-definition images are projected onto the glass panel in the conference room.
Three 65-inch high-definition screens channeling images of executives from the office at San Jose had no discernible latency. An array of speakers and microphones catch and project audio in stereo, convincingly mimicking the direction of voices across a conference table. Even the room’s lighting and wood paneling is designed to eliminate shadows and make the users feel as though they’re separated by just a few feet. It looked like as though six people were actually having a meeting.
Welcome to the modern virtual corporate world! The high-end version of video conferencing, aptly named Telepresence, is fast replacing the good old video conferencing. Video conferencing was often a grainy, jerky image, which did little to increase the feel of actual presence of the persons on the other end. “But with Telepresence, one gets life-size remote participants, fluid motion, accurate flesh tones, studio quality acoustics and lighting, true eye-contact or a close approximation of it, and immersive environments that establish consistent quality of communication between disparate locations,” informs Yugal Sharma, Country Manager, Polycom. Interestingly, industry researchers have found that employees using Telepresence systems had the same chemical responses that they would in face-to-face meetings.
Telepresence Gaining Momentum
Undoubtedly, Telepresence is becoming a reasonable substitute for meeting in person. The technology has a huge opportunity. The research firm Frost & Sullivan found that global Telepresence market generated $165.3million in revenues in 2007. That number is expected to exceed $1.44 billion by 2013. Top players like Cisco, HP, Lifesize, Tandberg, Teliris, and even Microsoft (MS RoundTable) are now increasingly bullish on this technology since it finds fast adoption by the corporations to bring down their opex. Globally, the blistering recession is on. However, the debate is whether technologies like Telepresence will help these meltdown-hit corporations to cut quite a good percentage of their operational costs? Across the globe, companies have started cutting on business trips of their executives. And it appears, however, that there may be a permanent drop in certain types of business travel. Instead of exhausting interstate and international trips, many managers are now staying put in their offices, linking up to other offices via advanced teleconferencing tools. The research firm Gartner predicts that Teleconferencing is one of the hottest global trends to watch.
“With the slow down really hitting businesses worldwide, there is a growing demand for Telepresence since it can help cut costs on travel,” says Rajesh K, Business Development Manager, Cisco. The Telepresence giant Cisco has so far deployed Telepresence rooms in more than 25 countries and over 85 cities worldwide. Cisco, internally, has 284 Telepresence rooms across the world. So far there have been 32,376 meetings, which helped avoid travel, saving Cisco $279 million. The increase in cost of travel is a major driver for adoption of Telepresence. Increase in productivity due to time saved in traveling and cost savings in logistics are other key factors. According to Zinnov Analysis, even a 10 percent reduction in travel could save $500,000 for a 1,000 employee organization.
In India, the conferencing market has undergone a paradigm shift with the emergence of Telepresence in the last six years. Today, Telepresence has a high potential as a business solution for real time communication in India. Currently, the Telepresence market is pegged at $7.2 million and this is expected to grow at a CAGR of 53 percent to reach $40 million by 2012. As per Frost & Sullivan survey, the videoconferencing market in India was valued at $4 million and $5.5 million in 2006 and 2007 respectively, thus showing a growth of 37.9 percent and is likely to grow at a CAGR of 23.2 percent by 2014. As convergence brings voice, data, and video onto the same network, new technologies are rewriting the rules of collaboration. Even small and medium businesses are keen on adopting video conferencing solutions.
Why it’s Hot?
“In India as well, the key drivers that could be catalysts for the growth of the Telepresence market are the fast improving broadband infrastructure, increase in travel costs, globalization, and the ‘green’ initiative by leading enterprises,” explains Amit Aggarwal, Engagement Manager, Zinnov Management consultancy.
That’s not it. “Cutting out air travel can go a long way to reducing their carbon footprint and thereby presenting a greener image,”says Dinesh Sehgal, Regional Director - India, Bangladesh, and Sri Lanka region, Tandberg. Besides, the technology is setting a trend towards a better life-work balance. Executives know well about the detrimental effect that extensive travel can have on their home lives; hence they opt for solutions that can fit into their regular schedule.
Traditionally in the past PSTN and ISDN lines have been used for three-way conferencing, which wasn’t a cost effective and efficient solution. When VOIP came into existence it provided the benefit of a much lower cost of communication. Reduction in broadband tariffs and improvement in broadband infrastructure further improved its usage.
Then came video conferencing. It considerably scored over audio conferencing due to the improved communication experience. But, video conferencing systems have some limitations such as lack of eye-to-eye contact, like inadequacy in sound and picture quality, lack of reliability, and so on. In fact, this has become a motivating factor for enterprises to move over to Telepresence. And Cisco is the early player in introducing Telepresence solutions in Indian market. “Its solutions offer life-size images of meeting participants on a HD video (1,080 pixel), and spatial audio. It provides a real time experience to users in communication,” says Rajesh.
Broadband subscription in India has been growing significantly and has reached 3.8 million by March 2008. Broadband infrastructure is the backbone for Telepresence. Initiatives by TRAI and competition amongst large Internet Service Providers (ISPs) are further adding to improvement in the broadband infrastructure. Plus, Introduction of 3G networks in the Indian market will further boost the infrastructure and further facilitate the availability of high-speed bandwidth.
The influx of global players like Wal-Mart, Vodafone, and Barclays in the Indian market is creating a huge opportunity, as they would need regular communication between their various offices situated across the globe. In addition, Indian companies going to the global market or partnering with multinationals are also feeling the need for Telepresence. The developed onsite-offshore model of India, due to the availability of quality talent and lower cost of operations, will definitely need the technology to further bring down costs. “And Telepresence could be a viable business solution for an efficient and economical medium of communication,” asserts Sehgal.
Importantly, today enterprises are making conscious efforts to reduce their carbon footprint and contribute towards going green, which in turn helps them to reduce their operational costs. Large IT firms are investing 5 to 10 percent of their IT budget esuriently in IT processes. IBM has launched Project Big Green 2.0 in India, introducing new modular data centers that could reduce the energy consumption by 50 percent. Wipro has reduced the number of servers in its data center from 400 to 100, saving one million KWh of power annually. Nokia has created smaller packaging for their accessories, cutting 54 percent of material used. HSBC has allocated $90 million to reduce its carbon footprint globally over the next five years.
Fast Spreading Adoption
IT majors are keen on Telepresence as it is eco-friendly and it indirectly helps save carbon emission. “The IT and ITES segments have been early adopters of audio-video conferencing due to multiple office locations and high onsite-offshore delivery model. Obviously, it could fast translate into adoption of Telepresence solutions as well,” states Aggarwal. Especially, growth in the number of R&D captives and shared service centers at multiple locations can fuel the growth of Telepresence in the IT and ITES segments. The other major target sectors for Telepresence vendors would be banking, educational institutions, and governments. Due to their widespread operations, leading banks such as RBI, PNS, SBI, UCO Bank, Indian Bank, and Canara Bank have adopted video conferencing.
Today, leading educational institutes are setting up infrastructure for arranging guest lectures through video conferencing. They could be migrated to Telepresence, which would help students overcome the limitations imposed by geographic boundaries. The professional colleges in India have witnessed a continuous growth over past few years due to the increase in demand of education, competition from new institutes, and government initiatives. Leading institutes are already investing in technology for efficient teaching mechanisms. Management schools like IIM Bangalore and XLRI use video conferencing to conduct virtual PG diploma courses. IIT Mumbai has tied up with Persistent Systems to offer postgraduate Distance Engineering Education Programs (DEEP) in IT and Management. Some of the NIT have already adopted video conferencing, whereas others have plans to implement it.
The government is already investing in conferencing solutions for efficient administration and reduced travel costs. Some state governments are investing in conferencing solutions for efficient administration. They could be targeted for pilot deployments, which could later result in large size deployments due to nationwide implementation. He union government of India has plans to connect all the state and district headquarters across the country with State Wide Area Network or SWAN. SWAN would connect over 100,000 government offices across India, and its implementation would cost over $800 million.
The Price Factor
Well, all these may look rosy. But, will organizations deploy Telepresence solution, which has a huge upfront cost? On an average, a Telepresence set up costs about $300,000, which includes three big 1,080p television screens, servers, lighting, and microphones (but not the network traffic and installation). However, standard HD video-conferencing systems sell between $5,000 to $80,000 a room. “Telepresence is an expensive proposition that will limit these systems to a very high end niche,” states a report from Wainhouse Research, which does not foresee the industry growing to more than 2,000 units a year, globally. This could be a hindrance for the market growth in cost sensitive and emerging markets like India.
Well, it’s true that everybody cannot afford the products of the kind offered by Ciscos of the world. And that’s where players like Life-Size, which provides HD video conferencing products at affordable prices, come in. Says K.Shivasankar, Country Manager, Life-Size, India, “In fact, Telepresence is an enhanced HD video conferencing experience with various aesthetic implementations. And one is paying such a huge price for that enhanced experience. Otherwise, all HD video conferencing solutions are Telepresence ready.”
On the contrary, in India, the ISPs could act as strategic partners to Telepresence vendors. These partnerships could be a boon for small customers. As, under this model, a vendor’s partners own and host a Telepresence room on a company’s own turf. That way, smaller customers can simply rent the equipment from one of those telecom providers for a monthly fee. They can bundle bandwidth along with the Telepresence suite to sell one-stop solutions to the end-users. In fact they are already following the same route. Today, Airtel Enterprise service offers the facility of audio and video conferencing with integrated conferencing capabilities. The company is able to sell more minutes at a higher price as services are bundled with bandwidth. The company has an MPLS network for running HD video conferencing services.
Reliance also offers video conferencing facilities in about 250 locations at Reliance World. The company has witnessed around 300 percent growth in total bookings for video conferencing within one year since its launch. Tata Communications offers a complete bouquet of Cisco-certified Telepresence network and managed services offering enterprises with a reliable, highly secure and easy-to-use facility. Various public room deployments made by Tata Communications are at Taj Group and four major locations at Confederation of Indian Industries (CII) offices. Recently, Tata Communications launched GlobalMeet audio conferencing service, which can be accessed through local numbers from 18 major business centers as well as from 30 countries worldwide.
The state owned BSNL offers audio and Web conferencing through its extensive network across the country, where a customer can choose the ISDN or IP networks for conferencing. Sify launched its video conferencing service iMeet way back in 2003. Presently, this service is available though 81 Sify iWays across 23 cities.
But there are some technological issues as well. An analyst opines, “Besides the price and bandwidth usage, the market for Telepresence systems in India could be further hampered by low bandwidth coupled with lack of interoperability with existing video conferencing systems and other business applications.” According to Cisco India, the high cost of Telepresence systems reflects, in part, the huge bandwidth they require, compared to regular video conferencing systems that run at as slow as 384 kilobits per second. “Telepresence requires dedicated lines running at two to four megabits per second,” informs Rajesh.
Obviously, interoperability, or the ability of these systems to work together is a major factor especially in emerging markets. While some Telepresence solutions are able to interact with Web conferencing tools, offerings from Cisco, HP, and Teliris don’t work with each other. For example, Cisco Telepresence participants are only able to interact with other Cisco Telepresence users; a serious limitation in today’s global business environment. “Interoperability today is the name of the game,” says an analyst. “You can’t have something that’s just a standalone unit. It really has to interoperate so that people can use whatever technology they want,” he adds. However, steps are now being taken towards greater interoperability. For example, in January 2008, HP and Tandberg announced an alliance to make their respective Telepresence and video conferencing portfolios interoperable.
It appears that the market is still in the process of maturation. It is imperative that for Telepresence to grow beyond the status of being a niche technology and expand into the broader market, the solutions will have to both come down in cost and become interoperable. In the pricing front, as we see an increase in competition, prices are likely to drop. Since the culture of cooperation and standardization has started emerging within the industry, Telepresence could help to beat the heat of recession in the near future.