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Web conferencing continues to grow ''virally,'' but will it become an epidemic?

1Dec

Last year companies spent nearly $150 billion on business travel, and while that figure represents a 20 percent decline from the year before (due mostly to a slumping economy, although security fears also played a role), the expense is still considerable and once again climbing.


Web conferencing, a collaborative technology that allows deskbound workers to share documents, PowerPoint presentations, and similar content from their respective PCs, was supposed to enjoy a surge in popularity as companies clamped down on travel expenses. That didn't happen, but Web conferencing continues to win converts, and the companies that offer such software and services are working hard to be perceived as providers of a mainstream technology.


To date, Web conferencing has come into companies at the departmental level, often in sales, marketing, product development, or training. Customers say that once the technology takes hold, other employees are quick to see its advantages and begin using it — the so-called viral effect.


But because it's usually a departmental purchase, a company may be using products and services from several competing Web-conferencing vendors, thus missing the chance to drive a better bargain. Robert DeKoning, president and CEO of Web-conferencing services firm Pixion Inc., says that this has been intentional: "Most vendors in this space want to stay as far away from the IT department and the CFO as they can," he says, so that they can win departmental business quickly, even if that means sharing a client with a handful of competitors.


But vendors are now taking steps to win business at the enterprise level, a trend that customers can leverage. "You can achieve big volume discounts, up to 25 percent, by standardizing on one Web-conferencing company," says David Alexander, an industry analyst with Frost & Sullivan, a consulting and market research firm. Some companies are also trying to land enterprise sales by offering new licensing models. Pixion, for example, released a new version of its PictureTalk product in October that can be installed at a customer's site (versus accessed via a Web-hosted subscription model), an option that Pixion says provides maximum security and a fixed cost.


WebEx Communications Inc., the dominant company in Web conferencing with more than 50 percent of the market share for services, counters that a subscription-based model in which Web conferencing is purchased in much the same manner as cell-phone service makes more sense. "This is a communications problem you're solving," says Stewart Sonnenfeldt, vice president of business development at WebEx. "It's a network service, and to effectively link all the people you want to reach you need a service that exists outside your firewall."


Debates about technical architecture aside, customers seem to like Web conferencing in all its forms: Webcasts, in which one or a few people communicate with, potentially, thousands of participants; Web conferences, in which the communication flows mostly in one direction but with fewer participants; and Web meetings, in which a handful of participants interact. Most Web conferences have an audio component, usually through the telephone. As participants speak or listen, they direct their attention to their desktop monitors, on which they all view the same source of visual support, be it a memo, PowerPoint slide, product spec, invoice, or other source. Separate windows may let participants submit questions or carry on a chat session, and may even allow them to see other participants if video cameras and the supporting technology are part of some or every participant's technological arsenal.


Joseph Tusa Jr., CFO of Comsys Information Technology Services Inc., an IT staffing, services, and solutions provider, says that Web conferencing provides a way to link 30 disparate offices efficiently and inexpensively. "We save more than $500,000 in travel costs each year by using Web conferencing," says Tusa. He says that more than half of the company's employees now use the WebEx service, primarily for training but also for compensation and regulatory reviews and, recently, for communicating details of a new standard contract.


Sonnenfeldt says that savings come in two forms: the hard-dollar costs associated with plane tickets and hotel rooms, and the productivity increase that comes from keeping people out of airports and rental cars. "[Attending a meeting] somewhere else often takes you out of the office for three days," he says. "If you can communicate the same material from your office in an hour-long Web conference, your productivity takes a huge leap."


Companies also like Web conferencing because, as Kevin Evans, CFO of PlaceWare Inc., says, "it accepts that the current infrastructure is enough: everyone has a phone and a browser, and that's all you need."


Analyst Alexander says the worldwide market for Web conferencing will grow from $427 million this year to $881 million by 2004. That's small in comparison to audioconferencing, which is expected to reach $2.5 billion by 2004 in the United States alone, but still impressive given that most newer technologies are finding it hard going in the current economic climate. Many vendors try to differentiate themselves by emphasizing their strengths in Webcasts, Web conferences, or Web meetings, but in fact, Alexander says, "95 percent of vendors can meet 90 percent of a company's needs. There are very few cases where you'd need a particular company's specialized capability."

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