Tune In to Low-Cost Video Conferencing

By Gerry Blackwell | Posted August 25, 2009

Technology is great when it solves a business problem. It’s even better when it saves you money in the process. Video conferencing can do both, and while the technology’s been around for some time, a lot of factors make video conferencing more appealing and affordable for small businesses than ever before.

Think about it: the recession, the rising cost of travel, environmental concerns, the emergence of virtual companies and telework, high-speed Internet and faster computers —all of these influences make video conferencing worth considering.

Big companies build their own on-premise video conferencing systems to reduce business travel, increase employee productivity and improve collaboration. But most small firms can’t afford such systems. But they can take advantage of new Web-based video conferencing services that in some cases require only a computer, broadband Internet connection and a webcam.

Service Providers

We focused on two providers: OoVoo, a start-up originally from Israel, and Avistar, a desktop video conferencing pioneer. OoVoo began as a consumer-oriented video chat provider in 2007, but earlier this year added a low-cost business-conferencing service. Avistar has been selling on-premise systems to businesses for 15 years. It launched its hosted service in 2007.

OoVoo, which has operations in Israel, Atlanta and New York, claims to have more than seven million users. Only “a single-digit percentage” pay for premium service, however. Most are consumers use the company’s free basic service. It’s too early to gauge response to the new business service, said OoVoo’s CEO Philippe Schwartz. “But we think we’ve hit a very sweet spot for small businesses, especially given the economy,” he said.

Avistar sells through channel partners and counts the number of “seats” or individual licensed users, and said it had more than 100,000 last year. Only 20,000 of those used the hosted service, most of them in small businesses with 25 or fewer users.

There are many other service providers, including Skype, which offers free video conferencing between individual Skype users (you pay extra for multi-participant conferences), and Web-conferencing providers such as WiredRed, MegaMeeting and market leader WebEx, now owned by Cisco Systems.

Cost and Quality

Most video- and Web-conferencing providers offer a subscription model. OoVoo charges about $10 a month per user, Avistar between $30 and $40. Given powerful enough computers at each end, adequate webcams and optimal conditions on the Internet, even free services like Skype can deliver surprisingly good quality video conferences. But as always, you get what you pay for.

It’s important to keep in mind that none of these services can approach the video quality or reliability of on-premise systems that use dedicated conferencing equipment and dedicated or shared managed communications links.

On-premise systems, however, can cost thousands to hundreds of thousands of dollars per location for equipment and room appointments, and hundreds to thousands of dollars a month for communications. Cloud-based services offer small firms a way to use video conferencing without spending scarce – or non-existent – capital or significantly increasing operational costs.

The Case for the Cloud

Hosted or cloud-based services offer some additional advantages. Because the service provider manages the hardware and software, you don’t need technical expertise in-house. Employees can use these services with little or no training.

With on-premise systems, it’s often difficult to include participants outside your own company because of technical incompatibilities among different vendors’ equipment.

Cloud-based services use the public Internet and typically offer free downloadable client software, making it easy to include participants anywhere in the world, using any computer.

Avistar’s service has the capability to make connections between its service and participants with traditional on-premise video conferencing systems.

Cloud-based services do have downsides, of course. You pay forever, and you pay for each user. The longer you use the service and the more people you add, the closer you get to a cross-over point at which it becomes cheaper to buy a system.

“If you get into several hundred users and beyond about 24 months, it probably makes sense to consider an on-premise system,” said Stephen Epstein, Avistar’s chief marketing officer.

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