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  • 1. Telepresence, Effective Visual Collaboration and the Future of Global Business at the Speed of Light By Howard S. Lichtman Human Productivity Lab August 2006 For more information or to order copies, visit © 2006 Howard S. Lichtman All rights reserved. No part of the material protected by this copyright may be reproduced or utilized in any form or by any means, in whole or in part, without permission in writing from the copyright owner. Requests for permission should be directed to: Howard S. Lichtman at Printed in the United States of America 1
  • 2. Telepresence, Effective Visual Collaboration and the Future of Global Business at the Speed of Light Table of Contents Preface . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 The Future of Telepresence and Effective Visual Collaboration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Effective Inter-Company Business . . . . . . . . . . . . . . . . . . . . . . . . . . 31 Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 The Interconnection of Effective Visual Understanding the Hard, Soft, and Opportunity Collaboration Networks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 Cost of Physical Travel on Senior Executive Time: . . . . . . . . . . . . 5 Publicly Available Telepresence Systems . . . . . . . . . . . . . . . . . . . . . 33 Why Traditional Videoconferencing Fails to Deliver the Goods. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Small Office/Home Office (SOHO) and Consumer Telepresence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 Telepresence — What is it and Why Does it Cost so Much Money? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 The Rise of the Virtual Organization . . . . . . . . . . . . . . . . . . . . . . . 34 So Why Does Telepresence Cost So Much Money? . . . . . . . . . . . .9 Better and Cheaper Telepresence Solutions . . . . . . . . . . . . . . . . . 34 The Importance of Creating Social Connections . . . . . . . . . . . . . 10 Distance Learning Will become a Key Telepresence Application . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 Types of Telepresence Solutions . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Headends- Content Will be King . . . . . . . . . . . . . . . . . . . . . . . . . . 36 Delivering Telepresence and Effective Visual Collaboration: The Telepresence Tool Kit. . . . . . . . . . . . . . . . . . . . 15 Accelerated Adoption for Economic and Geopolitical Reasons. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 The ROI of Telepresence and Effective Visual Collaboration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 Outsourcing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 Measuring and Understanding Telepresence and The Higher Costs and Reduced Convenience Effective Visual Collaboration Usage . . . . . . . . . . . . . . . . . . . . . . . . 24 of Physical Travel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 Business Effectiveness — Increased Utility, Greater Dramatically Higher Oil Prices — Peak Oil, Productivity, and Improved Outcomes . . . . . . . . . . . . . . . . . . . . . . 24 Natural Disasters, Terrorism, Expanded War in the Middle East or All of the Above. . . . . . . . . . . . . . . . . . . 38 Hard Dollar Travel Avoidance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 The Decline of the Dollar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 Summarized Hard and Soft Dollar ROI and Intangible Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 About the Author . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 Telepresence Buyers Guide . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 About the Human Productivity Lab . . . . . . . . . . . . . . . . . . . . . . . 41 Understanding the Total Cost Ownership and Acquisition Scenarios . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 Bibliography . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 End-to-End Managed Services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 Appendix A: Telepresence Company Profiles . . . . . . . . . . . . . . . . 44 Custom Integration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 Appendix B: Sponsoring Vendor Marketing Material . . . . . . . . . . 52 Capitalize or Lease? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 Teliris Global Table HP Halo Collaboration Studio 2
  • 3. Preface Preface Introduction “The future is already here. It’s just not very evenly distributed.” This paper focuses on a group of revolutionary visual — William Gibson collaboration technologies called telepresence. In the spirit of full disclosure the author sits on the informal and unpaid Board Over the next decade, virtually every major Global 5000 company of Advisors of telepresence provider Digital Video Enterprises will adopt a technology allowing them to interact with people, no matter and was the former Vice President of Business Development at how far away, as if they were in the same room. The technology is called telepresence, and a variety of Fortune 1000 organizations already use it, TeleSuite Corporation (now Destiny Conferencing). This paper reporting both satisfaction and a strong return on their investment. was sponsored by the following companies: ATK Services, Destiny Conferencing, Digital Video Enterprises, HP, MedPresence, Polycom, Telepresence meetings make remote participants life-size, with fluid Telanetix, and Teliris. motion, accurate flesh-tones and flawless audio. The experience feels remarkably natural and comfortable for almost any size meeting from two people to large classrooms. Telepresence solutions are easy to use and surprisingly handy for Telepresence Conferencing Defined collaborating on spreadsheets, slide decks, documents or even physical objects with minute details. Specialized telepresence solutions for specific Telepresence is the science and art of creating industries already exist for settings as diverse as pharmaceutical research labs, movie and television studios, university-level distance learning, and visual conferencing environments that address the human neurological operating rooms. factors of the participants and duplicate, as closely as possible, an in-person experience. Soon enough, executives and the affluent will equip their homes with telepresence capabilities, while everyone else will be able to rent a Telepresence greatly improves end-user acceptance, telepresence system in a hotel, mall, restaurant or pub. Within a decade’s which dramatically increases usage and substantially time, you won’t think twice about having a virtual business meeting (or virtual dinner) with participants from Baghdad, Tokyo, Milan, or all improves demand, ROI and customer satisfaction. three cities simultaneously. While a variety of methods can be used to deliver While this paper focuses on the current global corporate usage, ROI, telepresence solutions, they typically offer some combi- main players, and future of telepresence, it barely scrapes the surface of nation of the following improvements over the “talking the impact the technology will have on society. heads” experience of traditional videoconferencing: Telepresence will ultimately produce good, bad and unintended consequences as it revolutionizes the way the world communicates. • Life-size participants Already it’s made a mark, and that impact will keep growing in ways we can only speculate about at the dawn of its inception: • Fluid motion • It will continue to accelerate commerce, globalization, outsourcing and the creation of wealth • Accurate flesh tones • It will dramatically impact the airlines, hotels, global network providers, • Studio quality video, lighting and acoustics financial markets, advertisers and Hollywood • It will continue to revolutionize, among other things, global corporate • The absence of visible technology governance, gaming, education, entertainment, medicine, diplomacy, home schooling, politics, warfare and pornography • True eye contact, or the approximation of eye contact • It is and will continue to expand the places where knowledge workers can in large group settings live and work while simultaneously shrinking the world around them • Immersive and/or mirrored environments where partici- It will be a trip . . . pants feel as if they are in the same physical space Best, • A consistency-of-quality between disparate locations. HSL Howard S. Lichtman President, Human Productivity Lab Destiny Conferencing / Polycom RPX 400 Series 3
  • 4. Telepresence, Effective Visual Collaboration and the Future of Global Business at the Speed of Light Executive Summary Many thought that traditional videoconferencing would solve the problems of establishing face-to-face collaboration. However, At its core, business is about face-to-face relationships. Whether the technology has failed repeatedly to satisfy end-user expectations. those relationships are between a board member and corporate Though videoconferencing has moved from ISDN networks to IP, officer, salesperson and client, or partners in a joint venture, effective displays have gotten larger and better, and video codec resolution has business communication remains a combination of understanding, improved significantly. The average usage of videoconferencing remains mutual advantage and trust best exercised eye-to-eye between the moribund at an abysmal 15 hours per month during a time of global- main participants. ization, increasing costs and inconvenience of physical travel, and the general speed of business For decades, business has relied on commercial air travel to bring together the main players. Unfortunately, commercial air service Many videoconferencing users complain that talking to the continues to deteriorate (flight delays, mishandled bags and consumer “camera-on-the-TV-set-on-the-dessert-cart” is uncomfortable and complaints were all up in 2005i ), and last year alone a record five unnatural. The audio is often poor, the lighting wrong, colors off, airlines declared bankruptcy, including mega-carriers Northwest and resolution bad, format artificial, controls complex, collaborative tools Delta.ii Reduced competition and record fuel prices promise more weak and overall experience meager. Consequently, traditional video- problems in the future. conferencing is often the option of last resort, and even then almost always internally, and almost never for important meetings or with Compounding the problem, the Federal Aviation Administration customers or partners. forecasts a 45 percent growth of commercial passenger volume to one billion passengers annually by 2017.iii In the same time period, the Telepresence has dramatically improved the usage and acceptance FAA estimates that the private aviation jet fleet will double in sizeiv, of visual collaboration by addressing the human factors of partici- putting further pressure on an already strained capacity. pants to create a more natural, productive and realistic experience. Unlike videoconferencing, telepresence works at any scale, from the An article in the May 21, 2006 New York Times assessed the state desktop to small groups to distance learning classrooms to neuro- of the industry: logical surgical education. Quite simply, telepresence lets users feel as if they are “present” in the same physical space with others who might “Planes are expected to be packed fuller than at anytime be thousands of miles away. The experience is natural, comfortable, since World War II, when the airlines helped transport easy-to-use, supremely collaborative and as different from traditional troops. Fares are rising. Service frills are disappearing. videoconferencing as the space shuttle is to a commercial airliner. Logjams at airport security checkpoints loom as the Where traditional videoconferencing systems average 15 federal government strains to keep screener jobs filled. hours per month, adopters of telepresence group systems report The usual violent summer storms are expected to send revolutionary usage between 60 and 275 hours per month. Internally, the air traffic control system into chaos at times, with flight these solutions reduce travel for intra-company business, improve delays and cancellations cascading across the country. productivity and reduce wear and tear on road warriors. And many airline employees, after years of pay cuts and More importantly, most telepresence solutions provide a meeting added work, say they are dreading the season ahead.Those experience with a “business-class consistency-of-quality” between workers — and there are about 70,000 fewer of them than different organizations on the same network while simplifying how they in 2002 — will be handling more than 100 million more connect to and securely collaborate with partners, vendors, investors passengers this year than they did four years ago. and customers. The friendly skies, indeed.” This ability to effectively conduct global inter-company business will be, without a doubt, the “killer app” of the 21st century, and an Meanwhile, business continues to globalize, further increasing the application with potential for the same exponential growth that char- length, expense and hassle of both private and commercial aviation in acterized telephony, the Internet and other communication networks. managing international operations. The 19-hour flight from New York As more and more organizations join telepresence and effective visual City to Shanghai runs $2,300 for a 21-day advance coach fare; a 7-day collaboration networks, costs will drop, utility will rise and the benefits advance business class ticket costs $9,500.v of being connected will drive exponential adoption. As commercial and executive aviation slows down, the speed of The future of business will be the ability to cost-effectively business accelerates. The instantaneous nature of e-mail, webconfer- leverage your knowledge workers around the world wherever encing, and instant messaging have reset expectations of turn-around their geographical location, connecting them instantly with a lifelike times for decisions. Waiting days or weeks to huddle the team doesn’t experience and providing familiar and contextual tools to easily cut it anymore. The need to improve productivity and time-to-market collaborate with colleagues, partners, vendors and customers. This advantage becomes even more paramount in the face of nimble experience will be as natural and comfortable as if everyone was international competitors who compete with third world labor costs in the same room. and first world technology. 4
  • 5. Understanding the Hard, Soft and Opportunity Cost of Physical Travel on Senior Executive Time Understanding the Hard, Soft and Opportunity Cost of Physical Travel on Senior Executive Time The expense of physical travel can be measured in several Bristol, UK, and Los Angeles, California, are 5,350 actual air different ways: First, the hard costs: Airline tickets/executive aviation, miles apart as the crow flies. hotel rooms, dining, rental cars, car services and taxi cabs. the cost of the executive’s time while in transit, etc.. • Flying at the G IV’s recommended long range speed of 452 knots or 521 mph makes the flight 10 to 11 hours if you fly non-stop . . . Oppor tunity Cost Then the soft costs: The wear and tear on personnel, • . . . but you can’t since the G IV’s range is only 4,350 Nautical A term used in economics the lost productivity of being Miles, so you’ll need to tack on another 2 hours minimum for to describe the often hidden inaccessible to colleagues and landing and refueling. cost of choosing one course away from information and of action over another. The corporate resources. • That makes the total flying time 12-13+ hours minimum trapped opportunity cost is the cost in the flying tube. Each Way! of the next best alternative use of the same time and And let’s not forget the • Flying commercial would take 16 to 19 hours if the gods of travel resources. The opportunity most overlooked cost: the smile upon you. cost of physical travel is the opportunity cost of doing value of what could be accom- whatever it is you would have • I wasn’t able to find any flights between Los Angeles and Bristol plished during the time spent been doing while you and your with less than two stops each way, multiplying the chances of a preparing for, in transit and/ team are out of the office, in delay or missed connection. or recovering from a trip. transit and/or jet lagged. When I was with TeleSuite Corporation we once received a call from a senior technologist at a Fortune 1000 company whose CEO was: “Sick of Flying Around on his Private Jet” If you really think about it, it doesn’t matter if you’re relaxing in the sumptuous leather seating of the $25MM Gulfstream IV that this particular CEO is reported to own, or wedged into a middle seat in the steerage section of a commercial 747. Much of the pain of physical travel is the same: Time away from the family and friends, lost productivity, jet lag, delayed/cancelled flights and the opportunity cost of being trapped in a flying aluminum cylinder 40,000 feet above the ground. I had just joined TeleSuite as a new employee when this company called and had only heard the generalities of the CEO’s pain from the other members of the executive team. Later, I’d learn more of the specifics: The CEO spent hundreds of hours flying between Los Angeles and Bristol, England in a single year to complete a multi-million dollar project and cement what would become a very profitable ongoing collaborative relationship with a strategic par tner. Now he was looking for telepresence solutions that would allow the company to leverage its talent around the world without extensive physical travel. Still, were the costs and pain of physical travel really bad enough to merit betting millions on deploying tele- presence? Let’s crunch some numbers on the situation and see: 5
  • 6. Telepresence, Effective Visual Collaboration and the Future of Global Business at the Speed of Light Now let’s look at the money involved for executive aviation: company) and takes three weeks of vacation a year, his direct employment cost to the company is around $4482.44 an hour, or • While Gulfstream discontinued the G IV in 2002, the base replace- more than the $3,935 an hour cost in Direct Operating and Annual ment cost of its upgraded replacement the G450 is $34 MM. Fixed Costs for 400 hours of flying time. • The G550 is $45 MM. Let’s assume that physical travel takes the same toll on CEOs as it does on other mortal men. Jetlag, take-offs/landings and the • Assuming the aircraft are leased for the tax advantages, the need for food and sleep leaves them with 50 percent of their time back-of-the-napkin calculations on the monthly payments for a in the air for getting any work done. Factor in a loss of 100 hours 60-month lease of the $34 MM G 450 with a $1.00 buyout are per year of productive work in the case of our 200 hour frequent over $670K a month. flier and the hard cost of the lost time attributable to physical travel in the cost of employment alone in this one example is $448,244 • That $34 MM is the base cost for unpainted “green” planes with (and we haven’t even touched on the cost for the rest of the unfinished cabins. Completing the exterior and cabin can add executive team, managers, and employees). $3-5MM depending on the options. Travel is hard physically, stressful, and especially inconvenient • Even bargain hunting in the “previously owned” section of the lot for families. Many CEOs are already wealthy and if they ever tire of is almost as expensive. One 2001 G IV in Las Vegas recently listed hauling themselves around the world, they can take all their chips, for a fire-sale price of $28MM with “MAKE OFFER — MUST go home and leave the board of directors to deal with investor SELL!!!!” emphasized in the ad. uncertainty, loss of momentum and an expensive Heidrick and Struggles search. • Tack on the direct operating costs of the G IV including fuel, airframe and engine maintenance, charts, catering and landing So, while road warriors suffer the physical and mental pain of fees (estimated at $2,475 an hour on the OmniJet Trading physical travel, shareholders pay an even higher price in addition to Website) and the cost of ownership really starts to climb. the hard and soft costs of executive aviation and the employees’ time. The hidden cost of physical travel is that often overlooked • Next, add the Annual Fixed Costs that OmniJet estimates at opportunity cost of keeping the executive team, managers and $540,000 a year including crew salaries, hangar costs, insurance, employees trapped in an aluminum tube for hundreds of hours a training and modernization. year. Potential lost revenue to the company: staggering. • That brings the total estimated annual budget for flying the G IV Put quite simply, the true cost of keeping employees up in 400 hours a year (or 16 round trip flights between Burbank and the clouds are the lost profits from the products and services that Bristol) not including aircraft purchase price or lease payments don’t get researched, developed, tested, project managed, manufac- to $1,584,000 or $3,935 an hour. tured, inventoried, transported, distributed, sold, billed, recognized, and generally moved along through the process as quickly when And we haven’t even touched on the direct cost of the the team is airborne, jetlagged or in-transit between locations. CEO’s time . . . Steve Reinemund, the CEO and Chairman of PepsiCo and an HP Halo customer, has announced a goal of replacing the time that According to the Economic Policy Institute, the average total employees spend traveling internally with time spent meeting with compensation for a CEO in 2005 was $10,982,000. customers and prospective customers. The example seems starkly illustrative of the opportunity cost concept and the benefits of Assuming a CEO works 50 hours a week (probably a fair reducing avoidable internal travel. estimate given the responsibilities of running a Fortune 1000 6
  • 7. Why Traditional Videoconferencing Fails to Deliver the Goods Why Traditional Videoconferencing Fails to Deliver the Goods “It can’t be done, Tom! videoconferencing’s average usage per endpoint per month barely It can’t be done! I admit moved even as globalization has increased, travel has become more that you’ve made a lot of difficult, the threat of terrorism has grown, and the pace of business wonderful things — things has accelerated? I never dreamed of — but this is too much. To transmit Traditional videoconferencing’s ugly little secret: Many people pictures over a telephone don’t like the experience and prefer not to use it. wire, so that persons cannot only see to whom they are For years the traditional videoconferencing industry produced talking, as well as hear them a variety of spreadsheets, graphs and even interactive tools that — well, to be frank with you, promised substantial hard-dollar ROI based on avoided travel Tom, I should be sor ry to see between a company’s internal locations. Some companies in you waste your time trying to the field estimated additional soft-dollar benefits from improved invent such a thing.” productivity. There was only one problem with the traditional videoconferencing provider’s calculations: — Barton Swift to his son Tom Swift in Tom Swift and his Photo Telephone, 1914 The first mention of electronic visual communications I’ve ever seen is in “Tom Swift and his Photo Telephone,” published in 1914 “But our videoconferencing end-points are by Victor Appleton. The book’s alternate/subtitle, “The Picture that averaging more than 15 hours per month?” Saved a Fortune,” seems especially apropos given the multi-billion dollar stakes in the coming battle to connect the conference rooms, Organizations that use traditional videoconferencing more desktops and living rooms of the world. than 15 hours per month typically do so because: Videoconferencing has been around since 1956, when AT&T • They’ve applied videoconferencing industry built its first Picturephone test systemvii. It has steadily improved “best practices”: Dedicated QoS IP networks; in capability and functionality, but users haven’t exactly universally higher bandwidths; proper environmentals in lighting embraced it. Traditional videoconferencing systems have seen and acoustics; good user training/IT support and dramatic improvements in screen resolution, audio quality, reliability, improved ease-of-use through programmable security and ease-of-use, while the cost of group videoconferencing graphical user interfaces systems have declined dramatically. According to Wainhouse Research, an analyst firm that follows the conferencing industry, • Top down mandates curtailing business travel and/or usage of traditional videoconferencing group systems averages 15 requiring employees to use videoconferencing hours per month per end point. While some organizations do see higher usage, it pales in comparison to the demonstrated usage of • Low ratio of videoconferencing end-points telepresence and effective visual collaboration solutions. to employees Instantaneous, not limited by geography, and allowing communication between multiple parties in multiple locations, videoconferencing should be a “slam dunk” for business communi- Since no one really liked traditional videoconferencing very much, cations. So why does it fail to deliver year after year in connecting they didn’t view it as an alternative to an effective in-person meeting, the world? Why are only a small fraction of meetings done over and didn’t use it nearly as often as the providers projected. videoconferencing, especially important meetings where relation- ships are formed, where body language is as important as what When corporations do use videoconferencing, it is internally, is said, and meetings with partners, clients or prospects? Why has with colleagues only or because there isn’t another option. 7
  • 8. Telepresence, Effective Visual Collaboration and the Future of Global Business at the Speed of Light The Observant Videoconference Experience Traditional Videoconferencing Companies Going in the Wrong Direction In trying to replicate the experience of a face-to-face meeting, traditional videoconferencing fails the human brain’s smell test The logo of high-definition videoconferencing provider (tiny remote participants, jerky motion, poor audio, limited body Life-Size Communications (whose website refers to its set-top language visible, no eye contact, etc.). In my experience working videoconferencing solution as “telepresence-like”) unintentionally with such systems and talking with psychologists, I believe that it crystallizes one important way videoconferencing goes wrong. The also causes fatigue as the brain tries to process and adjust to two LifeSize logo seems to suggest that the key to achieving a more different experiences simultaneously: realistic experience is by increasing the size of the image in the vertical plane. However, humans have a forward-facing vertical field of view of between 120 and 135 degrees, and a combined horizontal field of view of about 180-200 degrees.viii In achieving a realistic, immersive “Life Size” visual experience, it is actually more important to address the horizontal field of view and peripheral vision. Telepresence providers achieve this with multiple, large format • The Medium (i.e. the observant experience itself: the obvious displays and video walls. LifeSize Communications, which makes a TV set, the 8-inch tall remote participants, the visible camera, the superb high-definition camera and codec, should be focused in the delay, the poor audio quality, the unnatural format, etc) opposite direction: • The Content (i.e. what is being said, the body language of the participants (if visible), etc.) The brain, consciously or unconsciously, objects to this conflict and, quite naturally, resists the experience. As a result, productivity and ROI suffer. 8
  • 9. Telepresence – What is it and Why Does it Cost so Much Money? Telepresence — What is it and Why Does it Cost so Much Money? About a decade ago, while the traditional videoconfer- So why does telepresence cost so much money? encing industr y was busily working on commoditizing the “plastic-camera-on-the-TV-set-on-the-desser t-car t,” a couple of Answer: Because the human brain is so damn smart! smar t resor t developers in the Caribbean, decided to take a different approach. Herold Williams and David Allen wanted to From the first seconds of life your brain has become give their well-heeled guests an effective way to conduct business accustomed to visual collaboration, with your eyes as “cameras” without having to leave their little slice of paradise. They decided delivering video to the “display” that is your brain. The retina to get the human factors of the meeting right (life-size remote and optic ner ve are actually outgrowths of the brain itselfix, an par ticipants, superb acoustics, culturally correct positioning, the organ with hundreds of millions of neurons devoted to vision. approximation of eye-contact, to name but a few) and then A full 30 percent of the brain’s cor tex is devoted to vision, integrate the electronics around the human experience. They versus eight percent for touch and three percent for hearing.x founded TeleSuite, the world’s first commercially successful Whereas each optic ner ve that carries signals from the retina to telepresence company. Backed by a visionar y investor, Karl Eller, the brain consists of around a million fibers, each auditory nerve and suppor ted by innovative, infinitely patient, early adopter is limited to about 30,000. xi Over your lifetime, your brain has customers such as AOL, 3COM, PricewaterhouseCoopers, developed cer tain innate preferences for communication, with and Cigna, the company’s product averaged 60-130+ hours “video” being its hands down favorite. per month, per site, four to seven times the usage of traditional videoconferencing. Studies have shown that both comprehension and retention are improved when you see information in addition to hearing it. Most impor tantly, some behavioral psychologists believe that 70 percent to 80 percent of communication is non-verbal xii: facial expressions, gestures, posture and eye contact, which the brain processes quickly, naturally and often subconsciously for a richer understanding of what is being communicated than through speech alone. To more closely replicate an in-person meeting and “trick” the brain into accepting the experience, telepresence providers address a range of human factors that traditional videocon- ferencing doesn’t. It’s more expensive, but the more natural, comfor table, immersive experience of telepresence improves the quality and quantity of visible non-verbal communication. TeleSuite Co-founders: David Allen and Herold Williams This superior experience dramatically improves usage, which in turn drives productivity and ROI. This end-user acceptance didn’t come cheap. Flying in the face of the conventional videoconferencing wisdom of the time — stack em’ high and sell em’ cheap — TeleSuite Systems cost (and still cost) hundreds of thousands of dollars per room, with thousands of dollars more in monthly charges per location for private network connectivity, support and maintenance. Telepresence solutions from HP and Teliris can run north of $10,000 dollars per month, per location. Deploying a site to an international location with limited fiber optic capacity can run as high as $40,000+ per month. Traditional videoconferencing desktop solutions range from Visionary Telepresence sub $100 webcams to $3,000 to $5,000 dollars for a dedicated Investor Karl Eller desktop videoconferencing solutions. Telepresence provider Digital Video Enterprises’ true eye contact displays start at $7,500 a piece and their true eye-contact, high-definition Executive Telepresence Solution is almost $30,000. 9
  • 10. Telepresence, Effective Visual Collaboration and the Future of Global Business at the Speed of Light The Importance of Creating Social Connections features (eyes, ears, etc.). Early in their development, they For over five years, social scientist Dennis Sandow has focus on the whole face and become aware of changes conducted social action research for HP. His work documents indicating displeasure, joy, excitement, etc. Just as in how dynamic social systems create organizational value that face-to-face encounters, Halo opens the biological crosses the boundaries of traditional organizational char ts. pathways required for conversations.” Influenced by Chilean biologist Dr. Humber to Manurana, who focused on intelligent action in social systems where everyone In addition, because social network encounters are face-to-face, accepts each other as legitimate par ticipants, Sandow has Sandow believes that the visual collaboration experience provides a helped HP understand and map the networks that create value level of “stimulus control” where the intensity of the social experience in the organization. elicits a greater degree of focus and active partici- pation than could be achieved in a conference call or webconference. In a whitepaper for HP that Sandow contributed to, he characterized the benefits of the HP Halo Collaboration Studio: While Halo has proven to reduce travel costs, it is also reported to bring new levels of group productivity. As informal social networks begin to meet in Halo rooms, they accelerate innovation, problem solving and project completion. Social capital or group productivity improves for a number of reasons. Face-to-face interactions that occurred quarterly or semi-annually now occur on a daily basis allowing informal social networks to flourish. Travel time and its physical effects on individual productivity are eliminated. Finally, loss of productivity from being away from the home office is avoided, while improved quality of life is realized, both of which contribute to productivity on the job. HP Social Network Map Showing Social Network Ties Across the Company and Around the World When HP started using the Halo Collaboration Studio, Sandow had a front row seat to observe how the technology could improve and accelerate the collaborative process of key social networks to help the organization. In an interview for this paper, Sandow explained why face-to-face interaction is key to effective social collaboration: “Brain research using Magnetic Resonance Imaging (MRI) has shown that facial recognition stimulates the emotional regions of the brain where agreement, consternation, joy, play, pleasure and seriousness are found. Up until age 2, children focus on specific facial 10
  • 11. Telepresence – What is it and Why Does it Cost so Much Money? Types of Telepresence Conferencing Solutions Telepresence conferencing solutions can be generally grouped into the following categories: Continuous Presence Group Systems — Continuous Presence Group Systems generally seat four to eight primary participants, though many providers have solutions that can add a second tier of seating to the environment. I believe the group system is the most important format for business because it most effectively replicates the traditional across-the-table business meeting in the usual and customary format with capacity for a traditional executive or project team. Providers include: Destiny Conferencing, HP, Polycom RPX, Teliris, and Telanetix HP - Halo Collaboration Studio Destiny Conferencing / Polycom RPX 408 Series 11
  • 12. Telepresence, Effective Visual Collaboration and the Future of Global Business at the Speed of Light Telepresence Distance Learning Classrooms — Holding from 18 to 36+ participants in an effective format for classroom instruction, distance learning solutions allow organizations (corporate or educational) to conduct instructor lead, classroom training between their own internal locations and those of other institutions on their effective visual collaboration network. Providers include: Destiny Conferencing, Polycom RPX, Teliris Polycom RPX 400 Series / Destiny Conferencing / MedPresence Teliris GlobalTable VirtuaLive 360 12
  • 13. Telepresence – What is it and Why Does it Cost so Much Money? Small Group Telepresence Systems — Small group systems are sometimes referred to as “one-to-three” or “one-to-four” person solutions. These solutions are less costly, seat less participants, and can be mobile. The video codec is usually a standards-based traditional videoconferencing codec and systems can be run on a company’s existing network if the proper bandwidth is available and compliment/ improve traditional videoconferencing deployments. Providers Include: ATK, Digital Video Enterprises, ATK I Vision Digital Video Enterprises Telepresence 50 Desktop and Executive Solutions — Desktop and Executive Solutions extend telepresence capabilities to executive offices or home offices improving communications between the executive team and key managers. Providers Include: Digital Video Enterprises Digital Video Enterprises Desktop Telepresence Display Digital Video Enterprises Executive Telepresence System 13
  • 14. Telepresence, Effective Visual Collaboration and the Future of Global Business at the Speed of Light Specialty Telepresence Solutions and Environments These can include unique telepresence applications: • DVE’s telepresence podium, which can project a life-size and life-like image of a speaker into one or more locations. • The MedPresence MOR 400, which integrates a telepresence capability into an operating room, allowing a surgeon to interact with remote medical students during a procedure. • DreamWorks Vir tual Studio Collaboration solution, which allows for motion picture and animation stor yboarding between sites and film editing. • Research and Development Environments, such as the phar- maceutical company that has used Teliris’ technology to create a vir tual lab environment between remote locations. Digital Video Enterprises Telepresence Podium The MedPresence MM200 is a portable telepresence solution that deploys from its own shipping crate and can be easily set up at remote hospitals, physician’s offices, and/or conference venues. MedPresence MOR 400 14
  • 15. Telepresence – What is it and Why Does it Cost so Much Money? Delivering Telepresence and Effective Visual Collaboration: The Telepresence Toolkit Telepresence is an art and science of trade-offs: cost versus to them from trade shows or resellers but they fail to mention the performance, quality of environment versus available space, func- fact that the prospective customers are hardly getting what could tionality versus ease-of-use making the experience and quality of be considered an accurate representation of the offering. communication in different telepresence systems vary. Adding to the complexity, many solution elements are the intellectual property of Digital Video Enterprises provides users with eye contact by a specific firm and protected by patent. Nevertheless, most telepres- mounting its products with eye-level cameras behind a piece of ence solutions provide some combination of the following features. silvered glass known as a beam splitter. With the camera hidden from view (another key telepresence concept covered later), Eye Contact the remote par ticipant is reflected off the beam splitter from an upward facing flat screen display. Behind the beam splitter, Eye contact is chief among the body’s non-verbal cues. From an “optical black” background absorbs diffused light, providing infancy, we are biologically drawn to the gaze of our parents, estab- a superior contrast and image to what you’d see if you were lishing a preference for personal communication that continues looking directly at the display. throughout life. Eye contact between humans is physiologically powerful, eliciting changes in blood pressure and heart ratexiii and increasing brain activity.xiv The information transmitted through eye contact is rich and varied: — Eye gaze provides many communication fundamentals, including: feedback, conversational regulation (turn taking), and the expres- sions that punctuate emotion.xv — Mutual eye gaze has been described by psychologists as “the key to the awareness of the thoughts of another”xvi Digital Video Enterprises’ True Eye-Contact Display Persons with strong eye contact are perceived to be more honestxvii, attractivexviii and successfulxix. Conversely, psychologists Destiny Conferencing’s TeleSuite and Polycom’s RPX mount call people with poor eye contact as “gaze-avoidant personalities,” multiple cameras behind a rear projection screen at eye-level, each rated less favorably in the eyes of others.xx camera capturing half the scene. The result for participants seated in the center of the room is an excellent approximation of eye contact, which is lost the further out you sit to the right or left in the environment. Engineered Environments While more sophisticated videoconferencing integrators may address such environmental elements as lighting, acoustical materials, camera placement and the color/reflectivity of furniture, the overwhelming majority of traditional videocon- ferencing rooms do not. Simply sticking a videoconferencing end point in a traditional conferencing room is a recipe for a mediocre experience: — Direct overhead lighting casts a shadow from the brow over the eye socket that the camera magnifies. — A room decorated with strong, saturated colors can clash Traditional videoconferencing systems deliver poor eye contact with the clothing of participants and skin tones, rendering them because the problem of parallax leads participants to intuitively artificial. focus on the eyes of the remote participants and not the camera. I know of several traditional videoconferencing vendors and resellers — Sticking a videoconferencing endpoint at the head of a long that actually place a camera in front of the display (obscuring the conference table assures an unnatural meeting format. view of the remote participants) of the videoconferencing systems they use for demonstrations at their corporate headquarters. This improves the experience for prospective customers who connect 15
  • 16. Telepresence, Effective Visual Collaboration and the Future of Global Business at the Speed of Light Some telepresence solutions such as Destiny Conferencing’s Conferencing’s TeleSuite, Polycom’s RPX and Telanetix use small lenses TeleSuite, the HP Halo Collaboration Studio, Polycom’s RPX, and concealed in a small opening in the display to minimize the effect. the Teliris GlobalTable solutions, create engineered environments Teliris offers options that hide the camera behind polarized glass and that precisely position participants. Some of the environmental in several of its solutions; Digital Video Enterprises is able to completely aspects engineered environments tackle include: hide the cameras at eye level behind the display. Lighting — Integrated lighting optimized for video and Video Quality positioned to ideally light each position in the environment. Of the many elements that go into an effective visual collabo- Cultural Proxemics — Precisely positioning the seating to ration, video quality remains one of the most important.The quality make the meeting format “culturally correct,” life-size and natural of video transmitted over Internet Protocol (IP) networks depends for both site-to-site connections and multi-site connections. on a number of factors: Mirrored Environments — Creating environments that are • The amount of bandwidth available to the codec identical with the other remote locations in the network. This way, all participants seem to share the same physical space. • The quality of the network over which it is being transmitted Acoustics — Using acoustical materials to improve both • The video resolution of the video codec and camera sound absorption (eliminating reverberation of sound in the envi- ronment), and sound insulation (blocking external sounds such as Telepresence and effective visual collaboration providers conversations in the hallway, outside traffic, or the building’s air improve video quality using a variety of methods: conditioning system). In addition, many telepresence providers have directional audio that makes the sound appear to be coming Increasing Bandwidth — Bandwidth is the measure of the from the direction of remote participants on the screen. amount of information that can be transmitted across a network. The more bandwidth you have, the more visual information you Absence of Visible Technology — Concealing as many aspects can transmit. The majority of deployed traditional videoconferencing of the conferencing technology as possible. Studies have shown that endpoints still use ISDN networks that typically transmit between the even when the brain’s visual cortex has been temporarily shut themselves at about 384K (384,000 bits per second). New current down, the brain can still process detailed visual information subcon- generation IP videoconferencing endpoints are capable of speeds of sciously.xxi Because human beings tend to behave differently in front 768K, 1.54Mbps, 4Mbps, or greater. Destiny Conferencing, HP Halo, of a camera (sometimes referred to as the “documentarian’s curse”), Telanetix and Teliris all use IP networks that provide more dedicated having a camera visible in a conferencing environment reduces the bandwidth than traditional ISDN and the overwhelming majority of comfort level of participants and naturalness of the meeting. Destiny IP videoconferencing deployments. Vendors Deploying Private Network Solutions Vendor/Solution Bandwidth Utilized Bandwidth Deployed Destiny Conferencing — 2 Screen System 1.54 Mbps 2 x T1/E1 — 3.0 Mbps Destiny Conferencing — 4 Screen System 3.0 Mbps 3 x T1/E1 — 4.5 Mbps HP Halo Collaboration Studio Confidential DS3 - 45 Mbps MedPresence — MCR/MOR 400 4.5 Mbps 3 x T1/E1 4.5 Mbps Telanetix — Digital Presence 1 Mbps to 45 Mbps 4 x T1 (6 Mbps) or DS3 Teliris — Standard GlobalTable 2 Mbps to 45 Mbps DS3 - 45 Mbps Teliris — High Definition GlobalTable Confidential Confidential Telepresence Systems — Vendor Bandwidth Recommendations Vendor/Solution Bandwidth Recommendation ATK Services - I Vision 1.5 — 4MB Digital Video Enterprises - Executive Telepesence 1.5MB System, Telepresence 50, Telepresence Podium Polycom RPX — 200 Series 1.5MB Minimum Polycom RPX — 400 Series 3.0MB Minimum 16
  • 17. Telepresence – What is it and Why Does it Cost so Much Money? Improving Bandwidth — High Bandwidth Dedicated, telepresence, making the cost of delivering a high-bandwidth QoS QoS Private Networks network substantial in those locales. Because of the real-time nature and delay intolerance of interactive video, simply throwing more bandwidth at a video Increasing Resolution codec does not guarantee a seamless picture so many telepres- Video resolution can be defined as the number of pixels across ence providers deploy dedicated Quality-of-Service (QoS) private the width and height of a display. The greater the resolution, the networks to ensure quality. Transmitting video over IP networks sharper the picture. The sharper the picture, the better the visual takes the compressed video from the codec and breaks down the realism, which improves the quantity and quality of the informa- data into packets that are then sent to the remote site(s). There tion received by the brain as the subtle nuances of interpersonal the video is decompressed and displayed on the screen. E-mail or communications become more apparent. These subtle nuances web surfing can tolerate lost, late, or out-of-sequence IP packets include perspiration, a slight grimace, or other nonverbal cues that (known as jitter in videoconferencing parlance), but not real-time might provide a window into the thoughts, truthfulness, motivation video. When IP packets containing video are lost in transit or arrive or comprehension level of remote participants. out-of-sequence, the video codec doesn’t have all the pieces of the puzzle to correctly reassemble the scene, resulting in a jumpy, A higher degree of visual realism also improves the brain’s ability freeze-frame effect. This ruins the immersive experience and “jolts” to suspend disbelief and accept the telepresence experience, letting it the brain back to a state of disbelief. A one-way latency (the time stop focusing on the “medium” and concentrate on the “message.” it takes IP packets to traverse a network and process through the The majority of deployed traditional videoconferencing video/audio codecs) of over 250 milliseconds would result in a systems are limited to providing FCIF resolution -352 x 288 perceptible and annoying delay when remote participants speak. (352 horizontal pixels x 288 vertical pixels) at 15 - 30 frames Because the Internet is a “best-effort” network where no per second. By comparison, standard cable television delivers a packets receive prioritization over any other packets, telepresence resolution of 672 x 384 at 30 frames per second and HDTV solutions need dedicated private networks that ensure extremely delivers 1280 x 720 or 1920 x 1080 at 30 to 60 frames per low latency, packet-loss, and jitter. Much of the developing world, second. Telepresence providers use current generation video such as China and India, doesn’t have abundant network bandwidth codecs including many that are capable of high-definition images of the quality required to support the real-time interaction of to provide a superior picture quality. Vendor/Solution # of people screens People Screen Size & Type Resolution Per Compression People Screen Standard ATK Services I Vision 1-5 50” DVE telepresence display 1024 x 768 H.263/H.264 MPEG-4 Destiny Conferencing TeleSuite 2 4’ x 4’ panels 48” x 43” Rear Projection 2SIF (352 x 576) H.263/H.264 MPEG-4 200 Series Fresnel Linticular scaled to 1024 x 768 Destiny Conferencing TeleSuite 4 4’ x 4’ panels 48” x 43” Rear Projection 2SIF (352 x 576) H.263/H.264 MPEG-4 400 Series Fresnel Linticular scaled to 1024 x 768 Digital Video Enterprises 1-3, 8+ in Multipoint or 40-46” LCD, Hidden 720p HDTV H.263/H.264 MPEG-4 - Executive Telepesence System Switched Presence Camera behind Screen Digital Video Enterprises 1-3, 8+ in Multipoint or 50” Plasma, Hidden Camera 720p HDTV H.263/H.264 MPEG-4 - Telepresence 50 Switched Presence behind Screen Digital Video Enterprises 1, Appears behind Holographic Projection 720p HDTV H.263/H.264 MPEG-4 - Telepresence Podium Podium technology HP Halo Collaboration Studio 3 50” plasma MPEG-2 MedPresence MOR 400 4 4 flat screen or Rear 1024 x 768 2CIF or H.263/H.264 MPEG-4 Projection Video Wall Greater MedPresence MCR 400 4 4’ x 4’ panels 16’ x 32” Rear Projection 1024 x 768 2CIF or H.263/H.264 MPEG-4 Video Wall Greater Polycom RPX 200 Series 2 4’ x 4’ panels 8’ x 42” Rear Projection 1024 x 768 2CIF or H.263/H.264 MPEG-4 Video Wall Greater Polycom RPX 400 Series 4 4’ x 4’ panels 16’ x 42” Rear Projection 1024 x 768 2CIF or H.263/H.264 MPEG-4 Video Wall Greater Telanetix 2 Customer’s Choice 1280 x 360 MPEG-4 Teliris — Standard GlobalTable 2-8 42” up to 100” Flat Panels D1 MPEG-2 or MPEG-4 Teliris — High Definition 2-8 42” up to 100” Flat Panels 720p or 1080i MPEG-2 or MPEG-4 17 GlobalTable
  • 18. Telepresence, Effective Visual Collaboration and the Future of Global Business at the Speed of Light Audio Quality Audio quality is one of the most underestimated aspects of an simultaneously without losing any of the audio from either effective visual collaboration experience. Telepresence providers location. This level of audio can’t be achieved in traditional multi- strive for a level of acoustical realism that makes remote partici- point videoconferences. Telepresence providers including Destiny pants sound natural and in the room. This realism in a conference Conferencing,Telanetix, and Teliris solve this problem by maintaining depends on a number of factors: direct connections to each location. Latency and Lip Synch — A remote participant’s speech must Spatial Orientation — In a traditional group videoconference, be in sync with the movement of his or her lips. Similar to video with a single microphone and single speaker on each side, it is often quality, high latency will produce a delay in the time between when difficult to immediately determine which tiny remote participant is something is said and heard on the remote end. This is a function speaking, referred to as spatial orientation. A traditional “Hollywood of the quality of the network. Squares”-esque multi-point videoconference exacerbates this problem by making participants even smaller. Most telepresence Audio Quality — As with video quality, the more audio group systems, on the other hand, make remote participants life- information captured and transmitted to a remote location results size, improving the ability to understand who is talking and some in a more faithful representation to listeners. Most telepresence use directional audio to make the sound appear to be coming from providers offer CD-quality audio with good echo cancellation a particular speaker or direction in the environment. in a “full duplex” configuration, allowing both sides to speak Vendor/Solution Audio Quality Audio Features Full Duplex In multi-point ATK Services 64 Kbps 20 KHz 5:1 A/V Destiny Conferencing 64 Kbps 22 KHz Y Digital Video Enterprises Multiple channel audio and voices can emanate — Executive Telepesence System, from the location of the people on the screens Telepresence 50,Telepresence Podium HP Halo Collaboration Studio CD Quality Audio Y MedPresence MCR/MOR 64 Kbps 20 KHz Y Telanetix 128 Kbps 44.1 Studio quality, per channel echo cancellation and Y KHz noise reduction, equalizatin, level compressor Teliris — Standard GlobalTable 256 — 384 Kbps Teliris - Standard GlobalTable - High end Y 20 KHz echo cancellation per vectored channel Teliris — High Definition 256 — 384 Kbps Teliris - High Definition GlobalTable - High Y GlobalTable 20 KHz end echo cancellation per vectored channel Polycom RPX 200 Series 64 Kbps 22 KHz Automatically mixes microphones and other Y audio sources while cancelling acoustic echo’s and background noise. Polycom RPX 400 Series 64 Kbps 22 KHz Automatically mixes microphones and other Y audio sources while cancelling acoustic echo’s and background noise. Ease-of-Use Traditional videoconferencing has long been characterized by — Tightly integrating and simplifying the use of collaborative tools technical complexity, requiring the mastery of often indecipher- in the environment. able remote controls and the assistance of a conferencing or IT professional in the room to set up and start the conference. While — Simplifying the ability to launch ad-hoc calls by providing a touch videoconferencing providers have simplified their controls, most sensitive GUI or intuitive call set up menu. telepresence providers have taken it a step further by: — A fixed camera and display solution that captures the entire scene — Providing concierge services that handle every aspect of eliminating the need to adjust the camera and the annoyance of reservation and call set up. This is an option offered by HP Halo, disruptive panning, tilting, and zooming. Destiny Conferencing, Polycom RPX, and Teliris. 18
  • 19. Telepresence – What is it and Why Does it Cost so Much Money? As an example: Teliris offers a room availability and scheduling Voice Activated — The remote site that is speaking or spoke option that provides a touch sensitive display outside each GlobalTable last is visible on the screen, leaving the other locations invisible until room that simplifies ad-hoc usage. Having a hallway conversation with they speak. a co-worker and want to bring in Bob in London? Check the avail- ability of both GlobalTable rooms at the door, reserve both rooms Neither approach offers much in the way of replicating the and call Bob in London on his cell phone and ask him to pop in for natural dynamics of a face-to-face meeting. Traditional continuous a quick meeting. presence formats often shrink images so small they prohibit the non-verbal cues so essential to effective visual collaboration. Voice activated formats also negate this benefit by keeping most participants off-screen. Most telepresence providers devote single or multiple screens to each remote location, allowing the key individuals at each to remain life-size or almost life-size. The Teliris GlobalTable touchscreen room availability and scheduling display Scaled Geometric Perspective/Life-Size Participants Most traditional group videoconferencing systems display the image of remote participants to a single 36- to 50-inch monitor. While many videoconferencing providers offer dual displays, the second Illustrative example of a three-site, multi-point meeting using the Teliris GlobalTable display is meant for data, a self-view of your location, or another remote location, not to double the screen real estate. As a result, the single screen reduces the size and warps the proportions of the While group telepresence environments do have their limita- people on the other end.Those non-verbal cues that are so important tions (the number of visible life-size participants is limited to the to communication end up getting lost in the shuffle, limiting the available screens in the environment), the overall experience is suspension of disbelief required to take participants from an observant substantially more natural, comfortable and productive than the experience to an immersive one. Most traditional videoconferencing tiny remote participants of videoconferencing. Some remote systems display users from more than two locations in a format known participants may not be visible on-screen, but all of them have a as “continuous presence,” which makes all participants look like they’re life-size view of the action. Besides, most large-group meetings tend on the title sequence of the Brady Bunch. to be dominated by a small number of speakers anyway. Telepresence providers address the Teliris uses a proprietary concept problem of scaled geometric perspective with called “Vir tualVectoring” to provide realistic large format video walls and multiple monitors, lines of sight and audio direction in a multi- keeping everyone life-size, or almost life-size point meeting. To explain Vir tualVectoring, and in perfect proportion. let’s expand on the three-site GlobalTable meeting above, using some additional Multi-Point Meetings — Conferencing with images supplied by Teliris. Three or More Locations To keep the appropriate orientation Traditional multi-point videoconference between speakers in a multi-point meeting, can be broken into two main formats: GlobalTable participants at each location tell the system where the active participants are Continuous Presence — Each remote sitting. Because Teliris places a dedicated call site is reduced in size and visible on the screen between each site with a specific camera, in with various screen formats of “Hollywood microphone and display for each position, the Squares”. participants are able to maintain their lines of site and the direction of audio when speaking with multiple locations. 19
  • 20. Telepresence, Effective Visual Collaboration and the Future of Global Business at the Speed of Light The HP Halo Collaboration Studio can connect up to four sites with up to four participants visible at each location. Destiny Conferencing’s TeleSuite System and Polycom’s RPX can connect up to five locations in their 400 series offerings with from two to twelve remote participants visible per screen depending on the model. 20
  • 21. Telepresence – What is it and Why Does it Cost so Much Money? Switched Presence — a proprietary solution offered by Digital Video Enterprises and ATK Services, switched presence gives each participant a microphone with a small control unit installed under the lip of the table in their group system. Everyone in the multi-site conference can take “the conch” by pushing a single button, which switches the focus of all remote sites to that participant, accompanied by a quick screen fade. This way, each participant appears life size and appears to have eye contact with all participants. Data Collaboration Digital Video Enterprises / ATK switched presence control unit Data may enter a visual collaboration environment from a laptop, USB flash drive, CD, piece-of-paper or other physical object, such as a circuit board. To handle all this input, telepresence environments use a variety of tools, including: Collaboration Screens — All providers of group telepresence systems provide screens for sharing power point slides, documents or the output from document and object cameras. Placement of the screens differs in each environment. Teliris GlobalTable Data Collaboration Screen Destiny Conferencing, Polycom RPX and MedPresence provide 17” monitors between each two seats Telanetix Digital Presence System has data collaboration on the outside screens 21
  • 22. Telepresence, Effective Visual Collaboration and the Future of Global Business at the Speed of Light Plug and Play Data Collaboration — Many telepresence providers simplify sharing data between locations by providing a plug and play VGA connection that lets participants connect a laptop for easy sharing between locations. Document Replication — Teliris offers a document replica- tion system that automatically scans, distributes and prints hard copies of physical documents to all locations in a conference. Teliris Document Replicator HP Halo Collaboration Studio’s Plug and Play Data Collaboration Document and Object Cameras — The HP Halo Studio and ATK’s I Vision offer a ceiling mounted high resolution, high magnifi- cation camera that lets users share documents or physical objects on the studio’s 50-inch collaboration screen. The magnification and resolution are high enough to show detail as fine as printed circuit boards or garment stitching. 22 HP Halo’s High Resolution, High Magnification Document Camera
  • 23. Telepresence – What is it and Why Does it Cost so Much Money? Stand Up Presentation Capability — The Teliris GlobalTable Vir tuaLive 360 telepresence environment offers an optional stand-up presentation capability which can capture a speaker at a lectern and display the speaker behind lecterns at the other remote locations. The environment can also capture par ticipants at a whiteboard or an optional stor yboarding capability for the motion picture and animation industries. Teliris GlobalTable VirtuaLive 360 With Stand-up Presentation and Lectern Option Reliability, End-to-End Service and Service-Level Agreements their solutions as an end-to-end service backed up with a Service Level Agreement covering: System Availability, Network Availability Telepresence doesn’t offer a lot of productivity advantages if the and Network Quality including packet loss, latency and jitter. system doesn’t work. Every time. In every location. Around the world. Various components of end-to-end service typically include: Complicated telepresence solutions entail the management and monitoring of multiple, complex sub-systems. These can include: Site Survey — A review of the architectural, facilities, networking, delivery, and installation logistics of each site. This is • Video and Audio codecs especially important for engineered environments that may require • Acoustical components modifications to the facility to accommodate the environment. • Echo-cancellation • Multiple microphones and speakers Telco Provisioning — Handling every aspect of provisioning • Network links the network to each location. • Local loops provisioned by a telecom provider • Long-haul transport Proactive Monitoring and Remote Management — Actively • Network equipment co-located around the world and continuously monitoring the quality of the network and status • Network premise equipment of the devices with the ability to remotely diagnose and trouble- • IP Routers/Switches shoot any problems. • Display Systems • Flat panel displays and DLP projectors with bulb life issues Concierge Services — The ability for any participant to access • Reservation Systems an “operator” that can place a call, assist with a reservation, explain • Gateways to off-network IP and ISDN traditional videoconfer- the collaborative tools or bridge in a telephone participant or encing end-points legacy videoconferencing end-point. The sub-systems listed above are a small sampling of the Equipment Maintenance and On-Site Repair — Burnt-out various technical elements that can comprise a group telepres- bulb in Burma? Mangled microphone in Malaysia? Cracked camera in ence solution. This complexity and interdependence is one of the Calgary? Many vendors, including Destiny Conferencing, HP, and Teliris, reasons the majority of group telepresence system providers offer offer equipment maintenance and on-site repair around the world. 23
  • 24. Telepresence, Effective Visual Collaboration and the Future of Global Business at the Speed of Light The ROI of Telepresence and Effective Visual Collaboration So while traditional videoconferencing systems long promised Business Effectiveness — Increased Utility, substantial Return-On-Investment (ROI), much of that ROI never materialized because the systems weren’t used. This section looks Greater Productivity, and Improved Outcomes at the substantial improvements in usage of telepresence systems over traditional videoconferencing and then the savings and benefits that become possible because they are actually used. Measuring and Understanding Telepresence and Effective Visual Collaboration Usage Like traditional videoconferencing, the usage of telepresence solutions is dependent on a number of factors: “I think the Halo room in the short time we’ve had it has already increased my team’s efficiency.You have to understand • The size, geographical distribution and business of the organization how we work.We have a large contingent of people in Chicago, another large contingent in Dallas and a fair number of people • Firms with geographically dispersed knowledge workers in New York and those people literally traveled every day collaborating on software or pharmaceutical development between those three sites - and that’s travel. Our expectation are naturally heavier users than, say, a mining company or is that this type of travel will virtually stop.” textile manufacturer, where the majority of employees are -Steve Reinemund, CEO and Chairman of the Board, PepsiCo engaged in manual labor. • Large multi-national firms with offices scattered over multiple Increased Utility international time zones tend to use their systems across off-peak hours driving additional usage. The poor quality of the videoconferencing experience has traditionally limited its usage to primarily lower importance intra- • Whether or not the system is open to all employees or reserved company meetings. Very few organizations would ever consider for management. having a Board of Directors’ session or an important meeting with a customer using traditional videoconference. And if they • The total number of telepresence sites an organization has and have, the outcome was likely limited. The quality of telepresence the total number of legacy videoconferencing systems to which has expanded the utility of visual collaboration to applications and the telepresence systems can connect. types of meetings previously beyond consideration for traditional videoconferencing users. Some examples: With that said, how do the major telepresence group system vendors stack up with traditional videoconferencing’s 15 hours per • DreamWorks’ Virtual Studio Colloboration initiative lets the month, per endpoint? company conduct virtual storyboard sessions between various campuses and Aardman Animation, a joint venture partner, in • Destiny Conferencing, who also manufactures the similar Polycom Bristol, UK. DreamWorks credits the use of telepresence with its specified RPX, reports some customers averaging as many as ability to ramp up from producing one animated feature a year 200 hours per site, per month. to its current pace of two animated features a year, effectively doubling its revenue potential each year. • HP, whose 20 active internal Halo Collaboration Studios make up the largest deployment of telepresence sites in the world, has • UBS and Oppenheimer used TeleSuite’s publicly available virtual systems averaging up 200 hours per month with some hitting meeting center at the Waldorf=Astoria to meet with private 275 hours per month. investors at another publicly available TeleSuite at the Ritz- Carlton in Phoenix. The companies’ mutual fund and portfolio • Some of this usage is assumed to be demonstrations for managers could present to, answer questions from, and develop prospective customers a rapport with the remote investors. Some of these events were catered and one concluded with a virtual wine tasting. • Teliris reports average usage at 60 percent of capacity during a • HP, utilizing its own Halo network, transferred a production line 10-hour business day or 120 hours per month, per location. from its R&D beginnings in Corvallis, Oregon to its permanent home in Singapore. According to HP, the usual timeframe for such a move is 12 months, with multiple trips between locations. The HP team responsible for the move estimated that its use of Halo enabled it to shave six months off the project and avoid 44 international trips. 24
  • 25. The ROI of Telepresence and Effective Visual Collaboration Greater Productivity In an ambitious attempt to create a visually compelling cross-curricular reading program for elementary school students, While it is harder to measure the soft-dollar ROI of greater the company used GlobalTable to connect across the Atlantic the productivity over traditional videoconferencing, numerous telep- talents and image library of the company’s Dorling Kindersley (DK) resence customers have specifically mentioned this as a benefit. subsidiary in London with the educational publishing expertise of In late 2004 CapitalOne surveyed over 150 employees, from the Pearson Longman in New York City. CXO level down, who had access to and experience with both a telepresence system from TeleSuite (now Destiny Conferencing) The project, fittingly enough, came to called Four Corners. The and the company’s top-of-the-line videoconferencing rooms. The GlobalTable connection allowed the New York and London teams videoconferencing rooms were custom integrated solutions that to meet for over a year, as often as twice a day, to collaborate on combined IP videoconferencing running at high-bandwidths, a 60” 140 titles —textbooks, teacher support materials and CD-ROMs display that doubled as a rear-projection interactive whiteboard, a spanning science, history, geography, art, design and technology, among VCR, a DVD player, a document camera, and a custom-designed, others, and each published in four different versions. According to touch-sensitive, wireless remote control that simplified call set up Ms. Kanter: “First year revenue was estimated at $2m and exceeded and use of the collaborative tools. all expectations with actual sales of $10m. It has been heralded as one of the greatest Pearson publishing success stories.” Here are some of the results of the survey and participant comments: “Awesome, we are fans and think it is so superior to videoconfer- Hard-Dollar Travel Avoidance encing that this is the only format we should use going forward” While the soft-dollar benefits of telepresence and effective visual collaboration (improved productivity, business effective- ness, flexibility and time-to-market advantage) outweigh travel savings alone, many organiza- tions evaluating this sort of investment first focus on the more easily quantifiable hard- dollar costs of reducing intra-company travel. In the Fortune 2000 it appears, a lot can be cut. HP’s travel expenses, including executive aviation, have been reported to be one percent of its $86 Billion in revenue, which equates to about ~$860MM annually.xxii In Q4 of 2005 with only a fraction of their existing “All TeleSuite meetings I have attended have been very positive. I network of Halo Studio up and operational could never use a videoconference again! TeleSuites are great!” HP estimated they were able to shave two percent off their existing travel budget or ~$17.2MM. Cisco’s CEO John Chambers has said “I set up meetings for T4+ all the time and using TeleSuite (and he believes a network of twenty telepresence centers would allow learning about the TeleSuite tools) have made meetings so much more the company to shave 20 percent off its travel budget. efficient and productive for me. My team always gets excited when we have the TeleSuite for meetings.” Let’s look at some actual ROI models to better understand where the savings come from. Improved Outcomes Important Note on the Following Hard-Dollar ROI Models: With less than an estimated forty companies The quality of the collaborative experience has also lead to actively utilizing telepresence and effective visual collabo- improved outcomes. ration solutions worldwide (and many for less than one year), ROI data is extremely hard to come by. Many Pearson plc, a $7 billion media company with 34,000 employees companies aren’t willing to share their travel data, and in 61 countries, has been a Teliris GlobalTable customer since 2001. many companies using telepresence solutions never did Justine Kanter, an HR and management development executive any ROI analysis, assuming the Return on Investment to at Pearson, was good enough to provide some specific examples be a “no-brainer.” While some of the ROI data below is of how Pearson is using the GlobalTable to “share intellectual several years old and — in two cases — from companies property across the company and allowing executives to connect that have not yet deployed telepresence solutions, the across business units” without extensive physical travel. Ms. Kanter models we’ve established are meant to illustrate the costs credited GlobalTable with enabling a degree of international involved in intra-company travel and convey how orga- collaboration between publishing subsidiaries that had tradition- nizations can model their potential travel savings which ally been in separate publishing niches, leading to one of Pearson’s is a consulting engagement the Lab offers. Some of the most complex and successful product launches ever. following companies cited here will remain anonymous. 25
  • 26. Telepresence, Effective Visual Collaboration and the Future of Global Business at the Speed of Light ROI Study #1 Fortune 100 Financial Services Company - >$20 Billion in 2003 Revenue Analysis done in 2004 with 2003 data — Company ended up not deploying a telepresence solution at the time 2003 Total travel spend excluding executive aviation: $95.6MM 2003 Total Spend by Expense Category ROI Analysis Assumptions Expense Type Total For Exp Type 1) Seven Telepresence Systems at six company locations Airfare $49,243,219.51 51% 2) Telepresence systems were leased over 48 months Car Rental $4,072,464.34 4% 3) Unlimited usage at each endpoint Lodging $29,664,622.59 31% 4) $18,232 was the average cost per telepresence system per month Meals-Self Traveling $4,685,348.40 5% 5) Total T & E $1,727 USD per trip 6) 1,286 round trips per month Taxi/Limo $7,983,438.54 8% 7) Green highlight is breakeven $95,649,093.37 The analysis looked at inter-company travel between six key locations, including London, Sydney, New York and three additional domestic locations. In 2003, the company made a total of 15,434 trips between these pairs of cities, with the top four pairs (all domestic) accounting for 4,800, 3,057, 3,044 and 1,956 respectively. The fifth largest city pair was NYC-London, with 1,165 trips. The company spent a total of $10.6MM on air travel for the top six destinations and $15.8MM on hotels. Trips to these locations averaged 1,286 trips per month. An analysis of four variables — airfare, hotel, meals (self) and car rental/taxi/limo expenses — yielded a fully-weighted average of $1,727 per employee, per trip. The analysis did not examine: Cost of corporate aviation, productivity, tax advantages of leasing, or cost of executive time while in transit. 1286 TOTAL AVG. Monthly Total Annualized Shifted # of TRAVEL COSTS TRAVEL COSTS % T&E T&E % of travel Travelers Traditional Virtual Traditional Virtual Savings Savings Savings 1.0% 13 22,209 127,622 1,727 9,923.95 -475% (105,413) (1,264,953) 2.5% 32 55,523 127,622 1,727 3,969.58 -130% (72,099) (865,187) 3.8% 49 84,395 127,622 1,727 2611.57 -51% (43,227) (518,724) 5.0% 64 111,046 127,622 1,727 1984.79 -15% (16,576) (198,911) 5.8% 75 128,813 127,622 1,727 1711.03 1% 1,191 14,298 10.0% 129 222,092 127,622 1,727 992.40 43% 94,470 1,133,642 12.5% 161 277,615 127,622 1,727 793.92 54% 149,993 1,799,919 15.0% 193 333,138 127,622 1,727 661.60 62% 205,516 2,466,196 17.5% 225 388,661 127,622 1,727 567.08 67% 261,039 3,132,472 20.0% 257 444,184 127,622 1,727 496.20 71% 316,562 3,798,749 22.5% 289 499,707 127,622 1,727 441.06 74% 372,085 4,465,025 25.0% 322 555,231 127,622 1,727 396.96 77% 427,609 5,131,302 30.0% 386 666,277 127,622 1,727 330.80 81% 538,655 6,463,855 26
  • 27. The ROI of Telepresence and Effective Visual Collaboration ROI Study #2 Company’s Self-Reported Additional Benefits: Justine Kanter, a Management Development and HR Executive at Pearson, reports: Pearson plc Global 1000 Media Company “I have been thinking a little about Global Table, after we spoke, particularly as I went straight into a meeting with the US. There are > $7.5 Billion in 2005 Revenue two important points to make I think: ROI Analysis Conducted in 2002 with 2002 Data 1. Frequency of use continues to increase, on a wide scale. The diary for bookings is full now, almost 2-3 weeks in advance. It is Teliris GlobalTable Customer — Locations in New York City becoming second nature for people to use it for the majority of and London at time of analysis communication with the US, and that includes our main Pearson Education offices in New Jersey, where people make the journey • Have since added additional rooms in London and New York to Manhattan without hesitation. The cost savings to all parts of • Analysis looked at savings internal to corporate parent only and the business continue, particularly as people are placing increasing not to subsidiaries. importance on family life and reduced travel - all values very strongly • Analysis only looked at hard-dollar travel savings of specific espoused by Marjorie Scardino [Pearson’s CEO]. David Bell [Director regularly scheduled transatlantic meetings and Chairman of Subsidiary] for example is doing less and less travel • Analysis did not consider: corporate aviation or productivity at the moment and is therefore increasingly reliant on it. • Executive time in transit was estimated at: 2. It is not just about saving money on international travel. It is • Mid-level executives: $2,000 per day also about getting smarter at: communication strategy collaboration • Senior Executives: $4,000 per day Marjorie recently announced a $50,000 prize for the best collabora- tion at Pearson. Marjorie’s aim is to get Pearson people working Corporate Strategy Group Meetings together across businesses to create new products, open new markets and build working relationships with their colleagues. Our • Five members in the UK, Six in the US businesses have more in common than they first thought. Obstacles • GlobalTable replaced three Meetings Every 2 Months to collaboration soon fall away when you have tools such as Global • $90,000 in savings every two months Table in place. We are now discussing strategic initiatives with people in the business that previously were just email colleagues because • Business class flights, hotel, car service, dining, and executive time in transit it is so simple. We are witnessing a massive culture change where people are talking more openly to each other about their markets Management Committee Meeting and products, and not feeling in any way threatened by sharing knowledge. Talking face to face with someone is very different from • Four members in the UK, 3 in US sending memos and submitting reports. For example, the meeting I • Group moved from monthly in-person meetings to using went off to on Wednesday was with a group of us here at plc, The GlobalTable every other month and an in-person meeting on Financial Times, and one of the HR Directors in Pearson Education alternate months. US. We have a very good relationship with all of them but previously • Approximate cost savings: $21,750 per meeting we would only communicate by email for standard business. We had • Business class flights, hotels, car service, dining, and executive a brilliant 2 hour discussion about a key talent review, sharing joint time in transit initiatives and looking at ways we could roll something out across the whole of Pearson - that conversation would never have happened Corporate Communications Meetings previously and importantly, the initiative would never have been developed. Finally there are an increasing number of positions being • New York City based Director meeting with London team and London investors taken by senior managers that require transatlantic collaboration — Chairman of Penguin worldwide, Finance Director of Penguin • Approximately 4 trips per month @ $7,250 per trip worldwide, Chief Collaboration Officer, and one person taking on Company’s estimated annualized savings for the single business the role of President of Pearson Inc in the US and Communications unit @ $2.1MM Director in the UK.This is not to say that these roles would not exist without Global Table, but it is certainly a very good tool to help make these positions work effectively.” 27
  • 28. Telepresence, Effective Visual Collaboration and the Future of Global Business at the Speed of Light ROI Study #3 Fortune 500 Oil Company • Airfare, hotel, car rental/car service 2004 ROI Analysis on 2003 Travel Data • Analysis did not evaluate: corporate aviation expenses, • Data from Jan. 1, 2003 — Sept. 30, 2003 only productivity, meals, enter tainment, or executive time in transit • Analysis looked at top three city pairs only: Houston, London, • Total number of trips between top three city pairs in nine months: and third Domestic U.S. Location 2,987 Est. 2003 Total: 3,982 • Nine-month spending on travel for top three city pairs: • Average Costs Per Trip: Airfare: $2,097 Car/Hotel: $681 Total Per $3,192,338; Est. 2003 Total: $4.25MM Trip: $2778 The analysis did not examine: Cost of corporate aviation, productivity, tax advantages of leasing, or cost of executive time while in transit. Monthly Components Annualized 6 Month Combined % Travel # # # TeleSuite Travel + Travel Shift Travel Shift Travel Shift Trips Shifted Travel TeleSuite Meeting Travel TeleSuite Usage TeleSuite to TeleSuite to TeleSuite to TeleSuite to TeleSuite Trips Meetings Hours Costs Site Costs Costs Costs Savings/Loss Savings/Loss Savings/Loss 0.0% 96 0 0 $266,667 $21,900 $0 $288,567 ($21,900) ($262,800) ($131,400) 5.0% 91 4 11 $253,333 $21,900 $1,782 $277,015 ($10,349) ($124,184) ($62,092) 10.0% 86 7 22 $240,000 $21,900 $3,564 $265,464 $1,203 $14,432 $7,216 15.0% 82 11 32 $226,667 $21,900 $5,346 $253,913 $12,754 $153,048 $76,524 20.0% 77 14 43 $213,333 $21,900 $7,128 $242,361 $24,305 $291,664 $145,832 25.0% 72 18 54 $200,000 $21,900 $8,910 $230,810 $35,857 $430,280 $215,140 30.0% 67 22 65 $186,667 $21,900 $10,692 $219,259 $47,408 $568,896 $284,448 35.0% 62 25 76 $173,333 $21,900 $12,474 $207,707 $58,959 $707,512 $353,756 40.0% 58 29 86 $160,000 $21,900 $14,256 $196,156 $70,511 $846,128 $423,064 45.0% 53 32 97 $146,667 $21,900 $16,038 $184,605 $82,062 $984,744 $492,372 50.0% 48 36 108 $133,333 $21,900 $17,820 $173,053 $93,613 $1,123,360 $561,680 55.0% 43 40 119 $120,000 $21,900 $19,602 $161,502 $105,165 $1,261,976 $630,988 60.0% 38 43 130 $106,667 $21,900 $21,384 $149,951 $116,716 $1,400,592 $700,296 Assumptions Company Travel Data 3 TeleSuite sites: London, Houston & 3rd City Average T&E per trip: TeleSuite Systems Initially Capitalized — Not Leased Airfare: $2,097 Total # Travel Trips = Monthly company travel only between all 3 cities: 96 Car/Hotel per trip: $681 Total # Meeting Hours = Average meeting length: 3 Meals/Incidentals per trip: $0 Travel Costs = Average T&E per trip: $2,778 Total T&E Per Trip: $2,778 TeleSuite Site Costs = Monthly site for all 3 sites (fixed): $21,900 TeleSuite Usage Costs = Hourly rate per site: $75 (assumes 80% of meetings are 2-way, 20% are 3-way) 28
  • 29. The ROI of Telepresence and Effective Visual Collaboration Summarized Hard and Soft Dollar ROI and Intangible Benefits • Reduced Intra-company business travel — Quantifiable hard • Merger & Acquisition — Improving the M&A process by: dollar ROI • Allowing the key executives from each team to be “right • Reduced Use of Executive Aircraft — Quantifiable hard down the hall” from their counterparts. dollar ROI • Reduce the costs associated with M & A in hard-dollar travel, • Productivity — Shortening decision times. Accelerating the lost productivity, and technical integration. speed of business. Reducing time in transit and out of the office. • Improve the knowledge and cultural transfer between the • Flexibility — The ability to hold meetings that would be organizations. impossible in any other format due to the time limitations of physical travel and/or the impossibility of being in two places • Quality-of-Life — Business travel can be hard on personnel, simultaneously. families, and the lower back. • Cost Efficiency — The ability to bring more of the team to a • Relationship Management — The ability to meet face-to-face meeting that normally would have traveled. and nurture important business relationships with board members, clients, direct reports, vendors, shareholders, and the • Knowledge Transfer & Management — Some telepresence envi- media among others. ronments can be used to capture, stream, and archive content (including both video and data) created in the environment. • Employee Health & Safety — The ability to do business in regions that hold the threat of terrorism, war, or public health • Time-to-Market Advantage — The ability to reduce the cycle emergencies. time to launch new product offerings and integrate them into production. • Disaster Preparation & Business Continuity — The ability to effectively manage after a disaster or during restrictions of air • True Lease Tax Advantages — Many telepresence systems can travel due to war or terrorism. be leased with an equipment write-off tied to the lease term, which can be shorter than IRS depreciation schedules, resulting • Improved ROI from existing VTC investment — Many in larger tax deductions each year. telepresence solutions have been proven to improve the usage and ROI of existing videoconferencing deployments by improving the experience of connecting to legacy videoconferencing systems and increasing their usage. The Polycom RPX /Destiny Conferencing 210M seats ten participants and doubles as a traditional conferencing/training room 29
  • 30. Telepresence, Effective Visual Collaboration and the Future of Global Business at the Speed of Light Telepresence Buyers Guide I will add to the list a third component which I call: Additional/Hidden Costs: These can include: acquisition Understanding the Total Cost of Ownership consulting, internal project management and training costs and Acquisition Scenarios and facilities (some facilities require significant modifications & make-ready to accept a specific telepresence environment, such as When an organization contemplates a telepresence solution, moving a vent, removing walls or repositioning a door.) it must first decide between purchasing an end-to-end managed service (such as Destiny Conferencing’s TeleSuite, Polycom’s RPX, Custom Integration the HP Halo Collaboration Studio, or the Teliris GlobalTable) or building a custom integrated solution. The latter uses products Vendors such as HP Halo and Teliris do not let the buyer run or bundled solutions from vendors such as ATK, Digital Video their products on an organization’s existing network or manage Enterprises and Telanetix that require installation, networking, and them internally, but this is not a problem for companies like ATK, support from an internal conferencing / IT department or third- Destiny Conferencing, Digital Video Enterprises, Polycom, and party vendors. Solutions by Destiny Conferencing and Polycom Telanetix. Understanding the total cost of ownership for a custom can be deployed as either end-to-end managed services or the integrated solution is much more complicated to determine — the telepresence environments purchased outright and run on an costs can vary widely depending on a number of variables: organization’s existing network. Since no single provider currently offers a complete range of telepresence solutions, it is conceivable • Network Connectivity — Do you have the right type of network that an organization might deploy a mix of vendors. Example: and enough bandwidth for the application or will you need to deploy an overlay network? • Six seat HP Halo Collaboration Studios for group collaboration between offices and to connect with vendors, customers and/or • Video Network Infrastructure — Do you require multi-point joint venture partners on the HP Halo Collaboration Network capabilities and does that require additional video network infrastructure to purchase and support? • 21 or 36 Seat TeleSuite Distance Learning Environments for training and large groups • Custom Software Development — Do you want a simplified interface to integrate collaborative tools, storing and archiving of • Digital Video Enterprises’ desktop Executive Telepresence System sessions, and/or streaming to the internet? Scheduling integration in the offices of senior executive with Outlook, Lotus Notes, and/or a company web portal? For the sake of simplicity, we will break these options down between End-to-End Managed Services and Custom Integration. Capitalize or Lease? After determining the vendor and initial number of sites, an End-to-End Managed Services organization will need to decide whether to capitalize the upfront costs or lease the equipment. Leasing can provide tax advantages, Typically the end-to-end managed service providers break such as an accelerated depreciating schedule. HP offers a leasing their costs down into two components: option on its $425,000 per room HP Halo Collaboration Studio through HP Financial Services that wraps up the upfront costs, Upfront Costs: The telepresence systems themselves including including environment, electronics, site survey and on-site instal- the environment and electronics, a site survey for each location lation into a 48-month lease with a fair market value end-of-term prior to installation, and the on-site installation of the system. purchase option. When coupled with the recurring charges for HVEN (HP’s network, concierge, and on-site maintenance Recurring Costs: The IP network, 24 x7 concierge, help desk services), the cost of acquiring a Halo Collaboration Suite comes and reservation services, and on-site equipment maintenance. in at a flat-rate cost of $27,500 per month, per room in a four- studio scenario. The HP Halo Collaboration Studio connected in a conference 30
  • 31. The Future of Telepresence and Effective Visual Collaboration The Future of Telepresence and Effective Visual Collaboration Now that the end-user acceptance problems of visual collabo- with two-screens and two-cameras mounted in the center of the ration have been solved and the early adopters are sharing their displays connect to a system with four screens and a camera experiences with the benefits and ROI, telepresence appears to over each screen? How do you maintain lines of sight, directional have a bright future indeed. HP and Polycom’s entry into the market audio, etc.?) and Cisco’s impending entry announced in Newsweek in March of 2006 is sure to attract the attention of other potential Global 2000 competitors (Sony and Tandberg are obvious candidates as fast-followers) assuring more research and development resources directed at the field. Let’s look at some of the trends that will be driving the industry in the coming decade: Effective Inter-Company Business The ability for organizations to instantaneously and effec- tively connect with vendors, investors, joint-venture partners and customers globally, will revolutionize business in ways that can only be speculated on at the dawn of this technology’s inception. This level of interconnection will start slowly but accelerate rapidly. Currently, fewer than 40 known companies have deployed telepresence and effective visual collaboration group systems. These companies have barely scratched the surface of the technology, but already their benefits have been substantial, the ROI proven and further adoption among their peers certain. Telepresence vendor Teliris has already developed a security feature for inter-company business called SecurePath NNI which sets up a secure connection between disparate organizations on the Teliris network. The connection must be approved by both parties in a call and then the connection is torn down when the call is completed. As you look over the following list of publicly known telep- resence customers, you will notice a bunch of individual islands and island chains. These initial early adopters are using telepres- ence internally, but the overwhelming majority cannot yet connect to their key vendors, joint venture partners and customers. The exception is HP Halo which has quickly built a network connecting them to some of their key business partners, vendors, and customers including most notably: DreamWorks and AMD which the company has strategic relationships for on-going research and product development. The ability for the employees of these orga- HP Halo’s GUI Simplifies Inter-company Calls nizations to walk down the hall and effectively collaborate with their partners globally is illustrative of the promise and potential that telepresence offers. Now multiply this capability by 10, 100, 1000, or 10,000 companies world-wide to understand the implica- Eventually I see a standard (or de-facto standard) developing for tions for the future of global business. inter-company business in the format of these systems. A baseline format will be adopted that establishes a consistency-of-quality Right now, however, because of networking and compatibility between the majority of telepresence systems with respect to: issues the majority of the systems below cannot yet connect cultural proxemics, camera and display placement, communications with the other telepresence systems not on their own networks. protocols, etc. for the overwhelming majority of inter-company While it is technically possible to inter-connect the networks and interactions especially in the telepresence group systems and pass IP traffic there are compatibility issues with multiple video distance learning classrooms. The stakes involved in being the first compression standards, room scheduling and availability, and envi- company to set “the standard” are huge, so expect to see a knife ronmental format (I.E. how does a telepresence group system fight at the speed of light between the vendors in this area. 31
  • 32. Telepresence, Effective Visual Collaboration and the Future of Global Business at the Speed of Light Telepresence and Effective Visual Collaboration Networks Today Publicly Announced Customers Company Existing Locations Planned/On-Order Public/Private Destiny Conferencing/TeleSuite — 100+ Sites — 50 Installed and 50+ On-Order — 3COM 4 sites Private Accounting Firm 3 sites Private AOL 9 sites 3-5 Private CapitalOne 6 sites Private Cigna 2 sites Private Commercial Bank (Global) 4 sites Private Commercial Products Manufacture 3 sites Private Deloitte 8 sites Private Destiny Conferencing 2 sites Public Domestic Banking Company 2 sites Private Duke University 3 sites Private Global Bank 5 sites Private Global Consulting Firm 10 sites Private Global Consulting/IT Services 12 sites Private Investment Bank 3 sites Private Media/Television company 6 sites Private PangeAir 2 site 50+* Public Pharma 3 sites Private PriceWaterhouseCoopers 7 sites Private Private Equity Firm 2 sites Private Public University 2 sites Private University of Arizona 1 site Private * Contingent on Funding HP Halo Collaboration Studio — 60 Sites Deployed or On-Order AIG Financial Products Corporation AMD 2 sites 2 sites Private BHP Billiton Private DreamWorks 10 sites Private HP 20 sites 3 sites Private GE Commercial Finance Private PepsiCo 5 sites Private Novartis Private A Consumer Products Company Private MedPresence — 15 Operating Rooms & 10 Conference Rooms Deployed or On-Order Arizona State University 1 site Private Arizona Heart Institute 3-5 sites Private Barrow Neurological Institute 3 site Private Translational Genomics Research Institute 1 site Private Polycom RPX — 10 Sites On-Order Polycom 10 Sites Private Waldorf=Astoria 1 site Public Telanetix — 8 Sites Deployed and 5 On-Order Film and Television Production Company 2 Sites Private Investment Bank 2 Sites Private Teliris — 110 Sites Deployed or On-Order 3i Private BP 5 sites Private GE Healthcare Private GlaxoSmithKline 14 sites Private Lazard Private Pearson 4 sites Private Royal Bank of Scotland Private Teliris 2 site 10 sites Private Vodaphone 5 sites Private Xchanging Private DDI Private IT Managed Service Provider Private Major Investment Bank Private Large Pharma Private Large manufacturer of mobile phone handsets and technologies Private Major studio and content provider Private Studio Private Major investment bank Private Major fortune 500 technology company Private 32 Management consultant firm Private
  • 33. The Future of Telepresence and Effective Visual Collaboration The Interconnection of Effective Visual a franchise business model and is currently seeking investors and fran- chisees with a goal to launch with an initial 50 locations world-wide. Collaboration Networks The Human Productivity Lab has also developed a business Making logical and physical connections while maintaining model for publicly available telepresence, Powwow Virtual an acceptable quality of service across multiple high-bandwidth Conferencing Centers, and is currently seeking partners and IP networks is a difficult undertaking . . . at least for now. Technical investment. There are sure to be others. challenges aside, some solution vendors will resist the interconnection of telepresence and effective visual collaboration networks. Vendors I expect to see one or more of the telepresence group system will seek to leverage the value of connecting to the businesses, publicly providers (Cisco, HP, Polycom, Teliris, etc.) getting into this business available locations and content headends on their own network by for a number of reasons: closing it to all but paying customers. This will not last long. Their own customers will demand connection between networks, making 1. Public availability dramatically improves the utility of their interconnection the future of effective visual collaboration. existing telepresence offering. For potential customers evaluating a telepresence solution between Brand X that connects to some Publicly Available Telepresence Systems number of Global Fortune 2000 companies OR Brand Y that connects to some number of Global Fortune 2000 companies AND While publicly available videoconferencing has failed to set the a global network of publicly available locations that differentiator world on fire, that’s not to say there isn’t a market opportunity could be substantial. Many corporate telepresence systems operate to connect business people around the globe in a comfortable, at capacity, especially during peak hours. This dynamic will worsen as productive and cost-effective manner. In fact, it is hard to imagine the use of the technology for intra-company business grows. Having another business opportunity where the existing alternative, global an overflow capacity for corporate users will be attractive. physical business travel, produces as much real “pain” in hard-dollar costs, lost productivity and the victimized lower back. Publicly available 2. Public availability dramatically reduces cost-of-sales. videoconferencing has remained moribund largely because: Demonstrating an effective visual collaboration environment is a very expensive proposition even for the big boys. First you take • The quality of the observant videoconferencing experience was/ at least two environments out of production (that your other is poor employees and/or customers would like to use to run their business), then you take away the sales person and sales manager’s • The costs were/are too high time. And to top it off, depending on the importance of the • The majority of publicly available sites still use the limited bandwidth prospect, you may take away some senior executives and product and poor reliability of ISDN networks for connections managers as well. Public availability allows the companies to flip the model around. Now you have prospective customers paying to • Effective, easy-to-use collaborative tools remain essentially “try-it-before-they-buy-it.” non-existent. • Public availability has never been the core business or received 3. Global network of demonstration facilities that pay for much focus from the existing players with the most locations themselves with the ability to grow exponentially. (Kinkos and HQ Global Workplaces) 4. Profitable business in its own right — With the right The medium also suffers from what I like to refer to as a business model, it can be quite profitable to rent a 350-600 sq. ft. “lack of a business-class consistency-of-quality,” where virtually space for several hundred dollars an hour with equipment leased every global publicly available videoconferencing room is different over a number of years. than every other room in lighting, acoustics, camera angle, cultural proxemics, etc. Small Office/Home Office (SOHO) and Most interestingly, publicly available videoconferencing lives on Consumer Telepresence with an ad-hoc network of thousands of global locations that see some use with the smart operators in the major metropolitan areas Two converging trends in the coming decade promise to conducting hundreds of conferences a year.These calls average $250 popularize telepresence for small/home business owners and to $2,000+ per event for what is essentially the rental of a very consumers: small physical space and $10,000 to $100,000 in easy-to-operate equipment. It’s not hard to see how dramatically improving the • Fiber Optic Bandwidth to the Home — As I type these words, end-user experience, lowering the cost and getting the business I look out my window at two 1’ x 4’ patches of fresh sod left model right could supercharge usage. by the Verizon sub-contractor who came through my neighbor- hood in Northern Virginia last week and laid fiber optic cable for David Allen, one of the co-founders of Destiny Conferencing/ Verizon Communications FiOS network. Each FiOS-connected TeleSuite, has started an affiliated company, PangeAir, with the goal of home has the theoretical capacity of 644 Mbps (or ~14 times launching a global network of public TeleSuite Systems in business-class the capacity of the 45Mbps DS3 circuits used by some tele- hotels and shared-tenant office buildings. The company has developed presence solutions), but Verizon limits the maximum available 33
  • 34. Telepresence, Effective Visual Collaboration and the Future of Global Business at the Speed of Light bandwidth to 30Mbps download and 5Mbps upload, running VoIP, and effective collaborative tools like webconferencing are $179.95-$199.95 per month depending on delivery area. By making it possible to cut the ties that bind. According to a 2005 way of comparison, a full 45Mbps DS3 of best effort Internet study from Nemertes Research, geographically dispersed workers connectivity was ~$75,000 per month a decade ago. Expect the are on the rise, creating a more virtual work force. Nemertes dynamic of higher speeds and lower costs to continue. estimates that the number of virtual workers has increased by 800 percent within the last five years, with between 60 to 70 percent of • The commoditization of consumer IP videoconferencing all employees working in locations different from their supervisors. appliances and capabilities — Cisco Systems recently acquired Telepresence’s ability to improve the communications between the country’s second largest set-top box maker, Scientific Atlanta, executives, supervisors, remote workers and virtual employees but for a record $6.9 billion. Evidently, Cisco viewed this acquisition still provide a natural humanistic interaction will only accelerate and as strategic and critical, because the company went into debt compliment this trend. The eventual public availability of telepres- for the first time ever to do so, issuing $6.5 billion in bonds ence and effective visual collaboration solutions will also accelerate to finance the purchase.xxiii With Cisco’s expertise in routing IP this dynamic. packets, videoconferencing infrastructure, and its soon to be released telepresence product line, it probably isn’t too much For many types of organizations where knowledge, information of a stretch to assume that the Cisco/Scientific Atlanta set-top and services are the only products, the advantages of the virtual box of the future could very well have an IP videoconferencing organization will be substantial. capability built into it. While Cisco and Scientific Atlanta illustrate the potential of the set top box, they will be competing with • Investing in effective visual collaboration systems to connect the PC as the consumer videoconferencing platform of the remote employees will be less expensive than owning/leasing/ future. Cheap web cams and interactive consumer videocon- maintaining brick and mortar facilities. ferencing capabilities already abound, often for free, in services like MSN Messenger, Skype, WebEx and AOL Instant Messenger. • Talent is no longer a function of geography (and/or cost-effective- Traditional set-top videoconferencing provider Emblaze VCON ness in the case of work than can be performed in lower-cost recently released a high-definition (720p) software-based video- geographies) conferencing codec that brings to most modern PCs a superb • Improved quality-of-life for former road warriors and commuters video quality and all the functionality to connect to traditional videoconferencing endpoints for less than $150 plus $100-200 • The ability to utilize talent that would be unavailable in a traditional for a good camera. Expect the dynamic of higher quality and 9-to-5 office environment given family, health, or travel restraints. lower costs to continue. I expect the merging of low-cost, high-speed bandwidth at home Better and Cheaper Telepresence Solutions and low-cost, high-quality videoconferencing capabilities in PCs and set-top boxes to popularize something akin to the traditional video- Expect better and cheaper systems over time as the costs conferencing experience first and then telepresence capabilities over of the major components of telepresence solutions substantially time. In many ways, the trend has already taken hold in PCs, though drop while the performance of those components dramatically quality has been moderate to poor. I expect quality to continue increases. Examples: to improve at the PC while I expect integration of higher-quality consumer videoconferencing capabilities to become standard in mid- • Bandwidth — Bandwidth costs are dropping dramatically while to-high-end home theatre set ups in the coming years. Eventually the capacity available to enterprise moves from T1 (1.54MBps) this will lead to consumer solutions that address the human and DS3 (45MBps) speeds to Gigabit Ethernet (1000MBps). As factors of participants and eventually a telepresence experience. more high-capacity fiber-optic submarine cables land around the Some companies have already deployed videoconferencing capa- world, IP bandwidth becomes more abundant and less expensive bilities to senior executive’s homes to improve productivity and around the globe. for disaster recovery/business continuity. Wired Magazine reported that Steven Spielberg wanted to extend the DreamWorks Virtual • Display Technology — DLP projection technology and flat screen Studio Collaboration’s telepresence capabilities to his home in the is enjoying a similar dynamic, with quality and screen size going Hamptons. With telepresence improving end-user acceptance and up as cost goes down. the cost of the technology and bandwidth dropping, more and more executives will have these capabilities in their home. • Codec Technology — Last year, 2005, saw the introduction of the first video codec to offer high-definition quality at T1 (1.0 Mbps) speed from LifeSize Communications, an increase in resolution of The Rise of the Virtual Organization 10X over traditional set top videoconferencing systems. More HD codec solutions are on the way from other vendors. Where knowledge workers were once tethered to corporate headquarters and regional offices by the need to be connected to • Environments — Part of the high cost of engineered environ- the company’s network and information resources, ubiquitous and ments like HP Halo and TeleSuite is small production runs. Expect inexpensive broadband connectivity, secure virtual private networks, the cost of engineered environments to come down with volume and specialization. 34
  • 35. The Future of Telepresence and Effective Visual Collaboration Distance Learning Will Become a Key Telepresence Application In 1999, the Eller College of Management at the University of Arizona launched the world’s first MBA program taught via telepresence. The course connected a professor and students in a telepresence classroom designed by TeleSuite (now Destiny Conferencing) in Tucson with other MBA students in Santa Clara using a TeleSuite System the college would rent from 3COM, a TeleSuite customer, two nights per week. The course was the only part-time option available in the Silicon Valley to get a Top 50 MBA. The Eller College of Management’s distance learning telepresence classroom connected to a remote classroom in both lecture mode and face-to-face The professor had the option of “stacking” the life-size virtual students on a video wall situated behind the local students in Tucson while lecturing or utilizing a separate video wall in the front of the classroom to connect the virtual students and local students face-to-face for discussions or collaborative case work. The program graduated three MBA classes using the technology and essentially broke even on the cost of the equipment through the tuition it earned from students who wouldn’t otherwise have signed up. In January 2006, MedPresence, an off-shoot of Destiny Conferencing (which utilizes the same core technology as the TeleSuite System and Polycom’s RPX), unveiled a surgical education solution the company had developed with Barrow Neurological Institute in Phoenix, Arizona and funded through the generosity of Karl Eller, an innovative telepresence investor and philanthropist. The MedPresence Conference Room is a telepresence solution for surgical education, physician consultations, case reviews, and the development of surgical tools and techniques. The system gives medical students, peer physicians and developers of surgical tools and techniques the ability to be “present” in the neurological operating room at Barrows and interact in real-time with the institute’s world-class surgeons and specialists during an operation. MedPresence MCR 400 with Students MedPresence MOR 400 in an Operation 35
  • 36. Telepresence, Effective Visual Collaboration and the Future of Global Business at the Speed of Light Unlike the traditional telemedicine view of the localized area whatever global city they happen to be located. MedPresence of the operation, the MedPresence solution provides a panoramic has also developed a por table version of the conference room view of the entire operating theatre allowing remote participants that can be transpor ted to seminars, medical schools and the ability to witness the complete scene: What equipment is other hospitals allowing the surgeons at Barrow and future being used, the positioning of the surgical staff and the pace of the MedPresence customers to share their specialized knowledge procedure. The view of the localized area of the operation, the around the world. view through the operating microscope, and medical informatics and imagery can be delivered to outside panels on the 4’x16’ The ability to cost-effectively deliver this level of specialized video wall or high-resolution displays mounted between each two instruction and real-time interaction will revolutionize the delivery locations in the MedPresence Conference Room. of education globally. Corporations, with their need for both internal training and training for customers, should prove to be From the operating room, the surgeon can see and interact equally as enthusiastic about telepresence distance learning as with the students and remote par ticipants in real-time in universities and medical schools. Artist’s Rendition of Destiny Conferencing’s design for a 36 seat distance learning TeleSuite System Headends: Content will be King Executive & Professional Continuing Education The Wharton Business School — MBA for Executives Companies that have complex vendor/customer relationships MIT — Professional Institute — Executive Continuing Education involving frequent direct interaction (such as instructor-lead training, Duke University — Fuqua School of Business MBA product certification or on-going consulting relationships) will help University of Arizona — Eller College of Management MBA drive inter-company visual collaboration. These content “headends” will accelerate connections by allowing their customers (and Medical Education and Training themselves) to reduce the expense of the relationship by connecting Barrow Neurological Institute — Surgical Education directly for virtual training or consulting. Expect individual headends Translational Genomics Research Institute — Genomics to star t small, offering limited training, cer tification and/or audit/ consulting to support the telepresence early adopters. As more and Public Accountancy, Internal Audit, and Consulting more headends offer more and more “content,” the network will PriceWaterhouseCoopers grow rapidly, and the utility of being connected to the network will Ernst & Young expand exponentially. The more Content Headends, the greater the Deloitte & Touche value of being connected to the network. Capgemini Accenture Examples of Existing and Potential Content Headends: BearingPoint Potential Content Headends with Existing Telepresence Wall Street — NASD Training & Complex Vendor Training and Capabilities in Green Certification Kaplan Financial-NASD Registered Representative and Principal IT Training / Certification Training American Management Association Bloomberg — Market Data Systems Training and Certification Cisco Systems — Product Certification Reuters — Market Data Systems Training and Certification Sun Microsystems — Instructor lead training 36
  • 37. The Future of Telepresence and Effective Visual Collaboration Accelerated Adoption for Economic and The Higher Costs and Reduced Convenience of Physical Travel Geopolitical Reasons For decades, commercial and executive aviation have provided cost-effective transportation for business travel largely thanks to Outsourcing relatively inexpensive jet fuel from relatively inexpensive crude oil. From 1994—2004, the price for a barrel of NYMEX light sweet When most people think of outsourcing, the first thing that crude averaged between $10 and $30 a barrel. Since 2004, the price comes to mind is the outsourcing of labor to lower cost geog- per barrel has more than doubled to $71.76 as of this writing (June raphies. While this trend will be accelerated by telepresence and 12th, 2006) and the price of jet fuel has risen from $0.82 a gallon expand to more and more white-collar occupations, it is only half to $3.45 a gallon today.xxiv And it won’t stop there. A number of of the outsourcing dynamic. potential geopolitical risks, natural disasters and resource economics issues could very well send the price of oil even higher, making a Management Guru Peter Drucker once recommended significant impact on the affordability and convenience of air travel. outsourcing everything for which there is no career track that could lead into senior management. This has been advice of limited value because of the cost savings that the physical proximity of employees has provided. The ability to effectively collaborate with other firms, foreign and domestic, offering specialized knowledge and ser vices will re-engineer and vir tualize the corporation even fur ther. “The inefficiency of knowledge workers is partly the legacy of the 19th-century belief that a modern company tries to do everything for itself. Now, thank God, we’ve discovered outsourcing, but I would also say we don’t yet really know how to do outsourcing well. Most look at outsourcing from the point of view of cutting costs, which I think is a delusion. What outsourcing does is greatly improve the quality of the people who still work for you. The commercial aviation industry relies on cheap seats and full I believe you should outsource everything for which planes. Reducing either side of this equation creates a vicious cycle for there is no career track that could lead into senior the carriers. Rising fuel prices equals higher ticket prices, which reduces management. When you outsource to a total-quality- demand for seats. Less passengers leads to even higher ticket prices control specialist, he is busy 48 weeks a year working for as carriers cover flying costs at reduced capacities. Higher ticket prices you and a number of other clients on something he sees leads to . . . reduced demand for seats. Dramatically more expensive as challenging. Whereas a total-quality-control person oil could deal another significant blow to the international aviation employed by the company is busy six weeks a year and industry, which saw five bankruptcies in 2005 and is still reeling from six the rest of the time is writing memoranda and looking for straight years of net losses, with 2006 set to be number seven.xxv The projects. That’s why when you outsource you may actually International Air Transport Association recently raised its 2006 net loss increase costs, but you also get better effectiveness.” forecast to $3 billion from $2.2 billion, and a major increase in the price of jet fuel would substantially increase these losses even further — Peter Drucker and most likely see marginally profitable routes and flights eliminated making air travel even less convenient.xxvi Additional airline bankrupt- cies will inevitably lead to reduced competition, which equals higher costs and less convenience. In a March 2006 survey conducted by Patni, a technology The growth of telepresence and effective visual collaboration outsourcing company and reported on by UPI, 89 percent of U.S., will worsen this dynamic by further reducing demand for commercial British, and Asian corporate technology decision makers at their aviation among business travelers who are the airlines least price- annual conference expected to increase their outsourcing budget dependent customers. When Cigna deployed two TeleSuite Systems in the next 12 months. Interestingly, the survey found that price was between its offices in Philadelphia and Bloomfield, Conn., it eliminated not given as the most important factor in selecting an outsourcing thousands of flights a year. Its ticket volume grew so low the company’s partner. The two most important factors were “cultural fit” and US Air representative even called to inquire about the financial health “quality of service,” which were each chosen by 24 percent of of the company.xxvii HP reported a two percent reduction in its respondents. The ability to address these cultural and quality issues $800MM+ travel costs in Q4 2005, with less than half of its planned through an effective collaborative experience is sure to improve deployment of 24 Halo Collaboration Studios active (no wonder the and accelerate the outsourcing paradigm. company is considering doubling that number in the future). 37
  • 38. Telepresence, Effective Visual Collaboration and the Future of Global Business at the Speed of Light Dramatically Higher Oil Prices — Peak Oil, Expanded War in Terrorism/Asymmetrical Warfare against Oil Production the Middle East, Increased Terrorism, Natural Disaster or All The potential of terrorism and asymmetrical warfare against of the Above. oil production facilities also threatens oil prices. CIA analyst Robert Baer has predicted in his book Sleeping with the Devil: How With high oil prices already wreaking havoc on commercial Washington Sold our Soul for Saudi Crude that: aviation, it wouldn’t take many more increases in the price of oil to deal a mortal blow to many carriers. A number of potential geopo- At the least, a moderate-to-severe attack on [Saudi litical events, natural disasters and the ongoing problem of global oil Arabian Oil Production Facility] Abqaiq would slow average field depletion could alone or together send oil over $100 per barrel. production there from 6.8 million barrels a day to roughly a million barrels for the first two months post attack, a Peak Oil loss equivalent to approximately one-third of America’s current daily consumption of crude oil. Even as long as “Peak oil” refers to the long-term depletion of oil production seven months after an attack, Abqaiq output would still globally. Geophysicist Marion King Hubert first coined the term in be about 40 percent of pre-attack output, as much as four the 1950s as “Hubert’s Peak,” postulating that oil production in oil million barrels below normal — roughly equal to what all fields, oil-producing countries and the world as a whole would all of the OPEC partners collectively took out of production follow a similar bell-shaped curve with rising production followed by during the devastating 1973 embargo. a production plateau, and then eventual depletion. In 1956, Hubert Indeed, Saudi Arabian security forces foiled an attack on predicted that conventional oilfield production in the United the Abqaiq facility in February this year when two separate cars States would peak in 1970, a position which earned him significant carrying explosives attempted to ram through a gate at the facility. scorn at the time but proved prophetic. Conventional U.S. oilfield And this was only one of a number of attacks the kingdom saw production (excluding off-shore, Alaska, deep-water, etc.) did peak against oil industry related targets this year. in 1971, and since then the U.S. has produced less oil and imported more. In fact, the majority of oil-producing countries have seen Oil facilities in Iraq have endured 298 recorded attacks since their oil production peak, including the majority of OPEC countries. June 2003. As of December 2005, Iraqi production averaged As fields dwindle, the global demand for oil is soaring. Growth has around 1.9 million barrels per day, as compared with its January averaged one to two percent a year as the third world continues 2003 2.58 million barrels per day production to industrialize. Peak oil theory has its skeptics, including this author, but should the theory prove true, the adoption of telepresence Expanded War in the Middle East and effective visual collaboration would necessarily accelerate. The specter of an expanded war in the Middle East looms ominously on the horizon. Iran continues to defy the United States’ demands to halt its uranium enrichment activities and threatens dollar hegemony by opening an oil bourse on the island of Kish to trade oil in Euros. At this writing in early June 2006, two U.S. aircraft carrier task forces are joining a third already in the region for what many observers believe to be an imminent confrontation. The gulf region contains 60 percent of the world’s known oil reserves and 18 million barrels a day (representing about 40 percent of internationally traded oil) must pass through the Strait of Hormuz, which borders Iran and is 34 miles at its narrowest junction.xxxi The Iranian military comes equipped with the Russian Sunburn anti-ship missile, which flies over two times the speed of sound over a 100- mile range and hugs the surface of the water to minimize its radar signature.xxxii In early June 2006, Iranian Ayatollah Ali Khamenei publicly threatened to disrupt oil supplies in the region with the following Natural Disasters statement: “If you [the United States] make a wrong move regarding Iran, definitely the energy flow in this region will be seriously endangered.” xxxiii The Gulf of Mexico accounts for 27 percent of U.S. oil and Should the conflict escalate, Iran has the ability to use the “oil natural gas production, and the region contains 46 percent of U.S. weapon,” not only restricting its own oil supplies but completely refining capacity.xxviii In 2005, Hurricanes Rita and Katrina destroyed shutting down oil shipments through the Persian Gulf. Energy 109 oil platforms and nine drilling rigs in the Gulf of Mexico, bringing experts have predicted that such an action could double or triple oil production in the region to a halt. Rigs, platforms and refineries the price per barrel. Expanded war in the Middle East would likely were secured and evacuated prior to and during each hurricane, arouse increased terrorism directed towards U.S. airlines and citizens many of them staying off-line for months during repairs from the abroad. This would result in tighter security at airports, imposing damage they took. A hurricane season just as bad or worse could additional costs in lost productivity and the potential reluctance of also dramatically increase oil prices.xxix key personnel to engage in business travel to certain regions.The net result to both domestic and international business: Higher physical travel costs in both ticket prices and lost productivity. 38
  • 39. The Future of Telepresence and Effective Visual Collaboration The Decline of the Dollar • The U.S. deficit hit a record $805 Billion, or 6.4 percent of national income, in 2005, a trend which shows no signs of slowingxl. As of mid-May 2006, the dollar has declined 22 percent against Coupled with a ballooning national debt of $8.347 Trillion at this a trade-weighted basket of seven currencies tracked by the Federal writing, a generally accepted deflation of the “housing bubble,” Reserve since 2001, the biggest drop since the index was estab- and substantial increases in both the Producer Price Index and lished in 1987.xxxiv The dollar has lost 7.1 percent of its value, versus the Consumer Price Index, there seems to be little positive the Euro, and 6.2 percent of its value versus the yen since Dec. 31st, economic news that could possibly reverse this trend. 2005. The dollar seems poised for a further decline, fueled by a 72 percent increase in the money supply over six years to a record A declining dollar will help drive adoption of telepresence and 10.27 Trillion under the Greenspan Fedxxxv and a decision by the effective visual collaboration solutions in a number of ways: central bank in March to simply quit publishing the total amount of $USD in circulation (known as the M3) fueling inflationary fears • Telepresence and effective visual collaboration solutions in which among $USD holders worldwide. The Organization for Economic the U.S. has competitive advantage will become less expensive in Co-operation and Development (OECD), an economic forum of EMEA and Asia-Pac. 30 of the world’s leading market democracies, recently predicted • The cost of travel will become more expensive as foreign oil that the additional depreciation of the dollar could be ‘of the order producers demand more dollars for their oil. of one-third to one-half.’xxxvi A number of other factors seem to suggest a coming decade of dollar weakness: • U.S. exports in general will become cheaper, stimulating foreign trade, which can be conducted more effectively by telepresence • Several foreign central banks have publicly reduced their dollar and effective visual collaboration. reserves including: Sweden, India, Syria,Thailand, Indonesia,Taiwan and China, while others including Japan and South Korea have • The cost of acquiring U.S. companies will be reduced, and telepres- announced their interest in doing so.xxxvii ence and effective visual collaboration will become an attractive option for foreign owners to manage their new U.S. assets. • The Iranians are in the process of opening an oil bourse to be denominated in “petroeuros” vs. “petrodollars,” which will further weaken demand for the dollar among nations that have tradi- The End tionally had to hold large $USD reserves to pay for oil imports. Venezuela, China, India and Russia have all expressed support for the boursexxxviii, and Russia President Vladimir Putin has proposed starting a non-USD denominated bourse in Russia that would trade oil in Rubles as well as publicly stated his desire to make the Ruble an internationally convertible reserve currency.xxxix Norway has also proposed a Euro-denominated oil bourse. 39
  • 40. Telepresence, Effective Visual Collaboration and the Future of Global Business at the Speed of Light About the Author Howard S. Lichtman (HSL) is a productivity-focused technologist Before he developed his interest in telepresence and visual and consultant with specialties in telepresence and visual collabo- collaboration, HSL started and ran the financial vertical sales orga- ration, organizational and personal productivity and sales model nization at Savvis Communications, which specialized in managed optimization. HSL served as Vice President of Business Development networking and managed service solutions for trading floor at TeleSuite Corporation, the first commercially successful telepres- technology and market data applications for Wall Street. Holding ence provider and an innovator in visual collaboration. positions that included Regional Sales Manager, Director of Sales, and National Sales Manager at Savvis, HSL opened outside sales offices in New York, Boston, Herndon, San Francisco, Chicago, Atlanta and Miami and managed multiple sales forces running diverse sales models simultaneously. During HSL’s tenure at Savvis, he founded the original Human Productivity Lab, a skunk works that tested and evaluated technologies and business process improvements with the potential to improve productivity, accelerate the sales cycle, or improve business communications within the organiza- tion. Some of the technologies the Lab rolled into production at Savvis included: Webconferencing, IP Videoconferencing, SMART Board Interactive Whiteboards, Blackberry Messaging, Franklin Covey Time Management, Collaboration Rooms, Cordless Headsets, and The Demonstrator, a trade show display designed by HSL to showcase SAVVIS’ solutions for financial industry connectivity. Prior to Savvis, HSL was a senior account manager at DIGEX when the company was one of the first and fastest growing private Internet Service Providers in the world. HSL has also held a variety of sales, sales management, marketing, consulting, and business development “gigs” at firms ranging from star t- ups such as Spontaneous Networks, where the endeavor was to develop a wire-speed data center vir tualization switch to For tune 500 powerhouse SunGard, the global leader in infor- mation availability. Howard can be reached at Prior to TeleSuite, HSL co-founded and served as President and Chief Product Officer of Powwow Networks, a visual collabo- ration start-up looking to improve the human factors, effectiveness, reliability and cost of both visual and data collaboration. Powwow Networks developed an alpha product that combined IP video, web conferencing and rear projection SMART Board interactive whiteboards into templated collaboration environments delivered as a flat-rate managed service with true QoS over disparate IP networks. 40
  • 41. About the Human Productivity Lab About the Human Productivity Lab The Human Productivity Lab is a consultancy specializing in telepresence and visual collaboration, personal and organizational productivity, and sales model optimization. The Lab was founded by Howard S. Lichtman, a productivity-focused technologist who, while running the financial vertical sales organization at a global internet- working company, came to a number of important realizations: • In high-growth and/or rapidly changing knowledge-centric organi- zations, you can achieve faster growth (in sales, market share and shareholder value) by investing in and improving the productivity and business communication capabilities of your existing human capital. • Increasing the return on human capital is possible by leveraging technology to improve your sales and knowledge workers ability to find, access, understand, evaluate, act on, communicate, disseminate and archive information. • The most important and most often neglected element in The Lab’s website at is currently successfully implementing technology is the “Human Factor.” the #1 site on the Internet for news, research, and analysis on corporate Failing to take it into account leads to wasted time, opportunity and organizational telepresence and currently averages over 350,000 hits and treasure. per month from over 65 different countries with a growth rate of over 15 to 30 percent a month in 2006. While unequivocally pro-technology, the Lab tempers its enthusiasm by a firm understanding of technology’s limits, especially with respect to the all-too-often neglected “Human Factors” of implementation. The Lab provides telepresence consulting services to vendors and end users including: Telepresence Solution Design, Acquisition Consulting, RFI/RFP Development, and Market Research among other engagements. In 2007 the Lab will be co-sponsoring TelePresence World 2007, a landmark series of CXO level conferences dedicated to telepresence, presence, and unified communications. The Lab’s Newsletter The Art of Productivity follows the telepresence industry and provides news The Lab is also seeking partners and investment for Powwow you can use to improve your Virtual, its business model for publicly available telepresence. personal effectiveness The Lab’s Board of Advisors includes: While Productivity is our Middle name, Jeff Dalton — Regional CTO, Stewart Title we always put the Human First. Brent Houlahan — Former CTO of NetSec and Vice President of Managed Security Services at MCI Contact Information Thomas Jackson — CEO of Mission Benefits and former CEO of Human Productivity Lab TeleSuite 43861 Laurel Ridge Drive Tim Nielsen — Vice President of Sales, Financial Vertical — Ashburn, VA 20147 SunGard O (512) 828-7317 Chris Van Waters — CIO, QuadraMed F (480) 393-5435 LeMoyne Zacherl — CFO, Learning Tree International 41
  • 42. Telepresence, Effective Visual Collaboration and the Future of Global Business at the Speed of Light Bibliography xvii Aguinis, Herman; Simonsen, Melissa M.; and Pierce, Charles A. 1998. “Effects of Nonverbal Behavior on Perceptions of i Bureau of Transportation Statistics Press Release — February 2nd Power Bases.” Journal of Social Psychology 138, no.4 (August): 2006: 455 469. dot018_06.html xviii Kleinke, Chris L.; Staneski, Richard A.; and Berger, Dale E. 1975. ii The Practical Nomad: FAQ About Airline Bankruptcies http://www. “Evaluation of an Interviewer as a Function of Interviewer Gaze, Reinforcement of Subject Gaze, and Interviewer Attractiveness.” Journal of Personality and Social Psychology iii FAA Aerospace Forecasts Fiscal Years 2006-2017, Page 30. http:// 1 (Januar y 31): 115 122. xix 2017/media/FAA%20Aerospace%20Forecast.pdf Hornik, Jacob. 1987. “The Effect of Touch and Gaze Upon Compliance and Interest of Interviewees.” Journal of Social ix FAA Aerospace Forecasts Fiscal Years 2006-2017, Page 38. http:// Psychology 127, no.6 (December): 681 683. xx 2017/media/FAA%20Aerospace%20Forecast.pdf Droney, Joylin M., and Brooks, Charles I. 1993. “Attributions of Self Esteem as a Function of Duration of Eye Contact.” Journal x Travelocity Website — Costs were for of Social Psychology 133, no.5 (October): 715 755. a 21 day advance economy fare and a 7 day advance business xxi class fare from NYC to Shanghai on domestic carriers. The Brain Sees What We Don’t, Live Science, November 1st, 2005: xi Managing Conferencing Services for Success,Wainhouse Research, blindsight.html July 2005, Page 9: bestanden/4121- xxii WP-ManagingConf4Success-v3.pdf Hewlett-Packard’s new Halo video-conferencing system brings people face-to-face from a world apart, but price tag poses xii A History of Videoconferencing Website: http://myhome.hanafos. hurdle, San Diego Union-Tribune, April 7th, 2006 com/~soonjp/vchx.html xxiii Latest Acquisition Gives Cisco Entree to Consumer Market By xiii Presentation: Human Factors and Perception — Dr. Oliver Staadt, BOBBY WHITE Department of Computer Science; University of California, Davis. February 28, 2006; Page B1 VR_Human_Factors.pdf ix Wikipedia : latest_acquisition_gives_cisco.pdf. xxiv x The Vision Thing: Mainly in the Brain, DISCOVER Vol. 14 No. 06 | ABC News Story: Higher Fuel Prices Mean Higher Airfares, June 1993 | Biology & Medicine : May 7th, 2006 Found at: jun-93/features/thevisionthingma227/ story?id=1934560&page=1 xxv xi Ibid Oil price surge may delay airline recovery, Business Week On- line June 5th, 2007. xii Birdwhistell, RL Kinesics and context; essays on body motion commu- xxvi nication. University of Pennsylvania Press, Philadelphia, 1970 Ibid xxvii xiii Wellens, A. Rodney. 1978. “A Device that Provides an Eye-to-Eye Author’s conversation with Linda Dykas, Cigna’s corporate Video Perspective for Interactive Television.” Behavior Research travel manager in 2003. Methods and Instrumentation 10, no.1, pp.25-26. xxviii Ready for the Hurricanes? By Rober t Aronen June 9, xiv Gale, Anthony; Kingsley, Eliot; Brookes, Sorrel; and Smith, David. 2006 Motley Fool 1978. “Cortical Arousal and Social Intimacy in the Human mft06060922.htm Female Under Different Conditions of Eye Contact.” Behavioral xxix Processes 3, no.3 (October): 271 275. Hurricanes Destroyed 109 Oil Platforms: US Government, Oct. 4th 2005, Agence France-Presse xv Kendon, A. 1967. “Some Functions of Gaze Direction in Social Interaction.” Acta Psychologica. 26: 22-63. xxx xvi Argyle, Michael, and Cook, Mark. Gaze and Mutual Gaze. 1976. Institute for the Analysis of Global Security, http://www.iags. New York: Cambridge University Press. org/iraqpipelinewatch.htm 42
  • 43. Bibliography xxxi xxxvii Facing Iran’s Challenge: Safeguarding Oil Exports from the Dollar catching Asian flu By Alan Boyd, March 11th, 2006 http:// Persian Gulf, Policy Watch — The Washington Institute for Near East Policy, June 7th 2006: xxxviii templateC05.php?CID=2477 The Greenback’s long downward spiral by Mike Whitney, May 4th 2006: xxxii The Sunburn - Iran’s Awesome Nuclear Anti-Ship Missile, By 060504_the_greenback_92s_long.htm Mark Gaffney 11-2-4 - xxxix article.php?story=20050118055547492 Collapse of the petrodollar looming by Dave Kimble, May 18th, 2006 xxxiii Teheran hints it may use oil weapon in nuclear row, xl The Standard- Monday June 5th, 2006 - http://www. US deficit data fuel anxieties on dollar, By Christopher Swann, The t_ Financial Times Published: March 14 2006 id=20121&sid=8267065&con_type=1 cms/s/db63450e-b383-11da-89c7-0000779e2340.html xxxiv Bush’s Bond Market Favors Borrowers; Clinton’s Rewarded Hubbert peak graph from public domain document “Strategic Traders May 22, 2006, Bloomberg: Significance of America’s Oil Shale Resource Volume I Assessment apps/news?pid=10000087&sid=agpZpPfkNMZM&refer=top_ of Strategic Issues” at reserves/ world_news publications/Pubs-NPR/npr_strategic_significancev1.pdf xxxv Central Bankers’ Worst Nightmare - the Gold and Bond Oil Prices 1994 — 2006 Price Graph — Wikipedia Entry: Petroleum Vigilantes, by Gary Dorsch, May 9th 2006: http://www.safehaven. com/article-5131.htm xxxvi OECD Warns that the rebalancing of the US deficit may drive dollar down sharply,, May 23rd, 2006: http://www. Artist Rendering of the upcoming 4th generation Teliris display system 43
  • 44. Telepresence, Effective Visual Collaboration and the Future of Global Business at the Speed of Light Telepresence Company Profiles HSL’s Analysis Company/Division: AudioTek /ATK Services The ATK I VISION is the first small group (1-4) telepresence Website: solution that utilizes the Digital Video Enterprises true eye-contact Company Founded: 1983 display technology and intelligent switched presence. The intelligent 2005 Revenue: N/A switched presence experience is like watching a live broadcast Public / Private: Private TV show with dynamic scene switching between participants. The company’s turnkey solution utilizes the Sony G70 codec to produce exceptional video quality for a non-HD system, and can accept other codecs or retro fit an existing deployment of traditional videocon- ferencing systems to improve the human factors, ease-of-use and collaboration.Though I was unable to experience an actual call when I visited the facility, I liked the ceiling-mounted document camera with a high magnification for collaborating on documents or physical objects such as circuit boards between remote locations. ATK had Key Executives: also done good work tying the multiple devices together into an Mike Stahl, President easy-to-use AMX touch-sensitive control unit. Duncan Foster, Vice President, Sales and Development Best know for providing the sound for such complex produc- tions as every SuperBowl since 1998, the Academy Awards, Company: Destiny Conferencing/TeleSuite The Emmy Awards, The Grammys and the Olympics, AudioTek Company Website: Corporation has more on its plate than mega events. The Company Founded: 2005 company’s ATK Services division handles complex AV integration Employees Dedicated To Visual Collaboration: 30 projects such as wiring every Apple Computer store in the US 2005 Revenue: N/A for voice, video, and data. The company has recently produced Public/Private: Private the first turnkey small group (1-4) Telepresence solution to use Digital Video Enterprises’ true-eye contact display technology and Intelligent Switched Telepresence control system, both of which ATK helped develop. The Intelligent Switched Telepresence control system gives Key Executives: each participant a small microphone/control unit installed under David Allen, Chief Executive Officer the lip of the table, allowing a user in a multi-site conference to take Scott Allen, President “the conch” —and push a single button that switches the focus of Ted Carter, Chief Operating Officer all remote sites to that participant after a quick screen fade. The Rob Whatley, Director of Customer Service system temporarily presents a wide shot of the table while the close shot of the designated speaker is acquired. In 1993, hotel developers David Allen and Herold Williams founded TeleSuite, the first commercially-successful telepres- The company’s I VISION direct telepresence experience ence provider, after failing to find a traditional videoconferencing marries the following technology and capabilities: solution good enough to keep their well-heeled guests from leaving their Caribbean resort early for business meetings in less • Digital Video Enterprises 50” true eye-contact display, which exotic locations. Initially founded as an R&D shop the company hides two Sony BRC 300 three chip cameras behind the display built early TeleSuite Systems from Styrofoam and duct tape to at eye-level understand the geometries of getting the environment right, the company shipped its first commercial TeleSuite Systems in 1997. • The Sony G 70 codec, capable of a 4MBps video stream (other The company has benefited from strong support from visionary codecs can be used) telepresence investor Karl Eller, the founder of Eller Outdoor Media and former Chairman and CEO of Circle K. • AMX Control System with media archiving capability, total room control for lighting, shades and conference set up In 2003, a board of directors’ dispute took management away • Ceiling mounted high resolution document camera with laser from the co-founders and the company foundered, laying off a alignment. number of staff in 2004. The company’s assets were sold back to co- founder David Allen (Herold Williams is no longer with the company) • 61” data collaboration Plasma display and the company was re-organized in 2005 as Destiny Conferencing. As Destiny Conferencing, the company struck a strategic partnership The I VISION starts at $165,000 and will fit into most and manufacturing agreement with Polycom in May 2006 whereby conference rooms without any make-ready other than appropriate Polycom specifies and private label OEM’s six TeleSuite based bandwidth. Systems under the Polycom RealPresence Experience (RPX) brand. 44
  • 45. Telepresence Company Profiles Polycom RPX customers will also have the option of solution from Destiny that can be purchased from Polycom, the purchasing a Polycom branded and specified RPX VNOC and company can’t help but benefit as Polycom drives the growth of Circuit Ser vices IP network and concierge/help desk services compatible telepresence environments. I see the Polycom partner- from Destiny. This network enables and connection and collabo- ship providing a number of pluses: ration with the company’s existing network of For tune 1000 customers, which include PricewaterhouseCoopers, AOL and • Further legitimizes telepresence (HP and Cisco got the ball rolling Cigna among others. nicely in 2006, but Polycom’s entry into the industry is sure to accelerate “mainstreaming”). Through an affiliated company, MedPresence, Destiny also manufactures a telepresence solution for surgical education. • Provides much needed technical expertise in IP video/audio Another affiliated company, PangeAir LLC, is working on launching and video network/infrastructure management, scheduling and a global network of publicly-available TeleSuite Systems in business reservation systems, and data collaboration tools (areas that class hotels and multi-tenant office buildings. have been a weakness at the company). • Marketing and distribution muscle (another historic TeleSuite TeleSuite Systems are free-standing, modular, engineered weakness) that should be able to nicely leverage Polycom’s telepresence environments that are deployed as a “room-within- tier-one marketing organization, sales force, and international a-room” and can be moved if required. The environments range network of resellers and channel partners. in size from four participants facing a 4’x8’ video wall starting at $249,000 to 36-seat distance learning environments where partici- • Transparency and Viability — After years of watching the big ones pants sit in tiered seating and face a 5’x20’ video wall. $559,000 get away because so many potential customers were hesitant to bet on financially shaky, privately-held TeleSuite, Polycom provide Destiny Conferencing’s network and concierge/help desk a level of comfort with public and audited financials and a stability services start at $5,950 per month for the two screen 200 series that TeleSuite had lacked. and $8,950 per month for the four screen 400 series. To avoid repetition, please find the technical specifications of the TeleSuite System on page 49 in the write-up on the Polycom RPX. Company: Digital Video Enterprises Website: HSL’s Analysis Company Founded: 1999 Employees Dedicated To Visual Collaboration: Two The TeleSuite System (including the Polycom RPX models) 2005 Revenue: N/A with their rear-projection semi-seamless video walls provide Public / Private: Private the most immersive experience of the major group telepres- ence systems providers. However, they lack the video quality achieved by its main competitors, HP and Teliris, who throw 45MB of bandwidth at each location. Still, the ability to deliver effective telepresence environments at more cost-effective T1/ E1 speeds is an attractive proposition for those organizations that can’t afford the operating costs of systems requiring 45MB Key Executives: of bandwidth. Jeff Machtig, Co-founder Dr. Steve McNelley, Co-founder The company’s large distance education environments are a strong differentiator from the rest of the pack, and the Digital Video Enterprises (DVE) is small, privately held system has proven itself through its use at the Eller College corporation specializing in telepresence solutions that provide of Management at the University of Arizona, graduating true eye-contact between participants and holographic displays three remote MBA classes. As telepresence continues to gain for telepresence, marketing and virtual reality applications. The acceptance, I expect that other universities and corporations company was founded in 1995 as Videotronic Systems, a partner- will take the plunge; eventually creating a network of “content” ship between Jeff Machtig, an optics and special effects inventor, that will allow organizations to access specialized instruction and Dr. Steve McNelley, a psychologist whose doctoral work from around the world. With the Eller College of Management, and career has been focused on the importance of eye-contact Duke’s Fuqua Business School and the Barrow Neurological in human communications. DVE holds 11 patents (with several Institute already on the network, Destiny seems ideally situated pending) in various aspects of true eye contact videoconferencing to benefit as telepresence goes mainstream. and telepresence. Destiny’s strategic partnership with Polycom is the most The company’s product line falls into two categories: exciting news from the company in quite some time, a grand slam home run for the boys from Dayton. While it remains to be seen True Eye-Contact Telepresence and Display Solutions — The how many prospective customers will choose to buy the equivalent company makes a variety of display and bundled solutions that use 45
  • 46. Telepresence, Effective Visual Collaboration and the Future of Global Business at the Speed of Light eye-level cameras behind a piece of silvered glass known as a beam personal/executive system. With a 40” true eye-contact display splitter. With the camera hidden from view, the image of the remote and LifeSize Communications’ camera and codec bundled into participant is reflected off the beam splitter from an upward-facing a turnkey package, the ETS lets life-size remote participants talk flat screen display, allowing natural eye-contact between partici- with true eye contact in high-definition. pants. • The company’s Telepresence Podium works uniquely well for DVE’s true eye-contact display solutions are available in a remote presenters. I believe that the Telepresence Podium’s variety of formats: ability to project a life-like virtual speaker into a venue (or multiple venues simultaneously) anywhere in the world will be • Immersive Group Systems —DVE has a number of designs for an attractive option that will catch on over time as telepresence immersive group systems with true eye contact and multiple continues to gain acceptance and visibility. camera arrays that work with six to eight participants. The downside to Digital Video Enterprises’ solutions: their • Small Group Roll-About Systems — One to four participants cost relative to the current expectations of the market especially with a locking cabinet that rolls through a standard 30” door. in the executive systems. The company’s size keeps its production The DVE Telepresence 50 can upgrade an existing deployment or runs small, which means that it’s most affordable desktop display improve a planned deployment of traditional videoconferencing solution, the $7,500 Silhouette, can’t be ordered in increments less end-points. than 15, so customers wanting one to fourteen units have to get on a waiting list. However, the company’s current strategy is to focus • Personal/Executive Systems — The DVE Eye-Contact Silhouette on the new Executive Telepresence System, which creates real size provides a dedicated eye-contact display solution for the desktop, images of conferees in your office. Having been released less than allowing a user’s computer monitor to remain dedicated to data three weeks ago at this writing, the ETS is currently being deployed collaboration.The Executive Telepresence Solution (ETS) provides around the globe with no minimum order needed. a life-size, eye-contact experience in a small footprint, mobile lockable cabinet for an executive’s office or small conference The company also has a demonstration problem. Like telepres- room. ence group systems, eye-contact telepresence is an experience; getting experienced is hard to do unless you visit a DVE customer, and most Telepresence Podiums and Holographic Displays movie studios, investment banks, etc. don’t exactly let folks walk in off the street. Most prospects have to travel to the company’s R&D DVE makes a number of specialty solutions, including: facility in Irvine, California. This will continue to hinder adoption until the company develops a strategy or partnership to make convenient • Telepresence Podium —Projects a life-size image of a remote demonstration units available around the world. presenter as if he or she is standing at a podium. The podium itself has a camera that allows the remote presenter to see the room he is presenting to; in turn, the remote audience can see the presenter’s demeanor and gestures clearly. Company/Division: Hewlett-Packard/Halo Collaboration Division Website: • Virtual Observer — A portable production studio for distance learning Division Founded: 2003 and training that tracks and captures stand-up presentations. Employees Dedicated To Visual Collaboration: N/A 2005 Revenue: $86.70B • Transparent Telepresence Display —Presents floating 3-D objects in addition to remote participants for marketing purposes. HSL’s Analysis Digital Video Enterprises remains the undiscovered jewel of the telepresence industry. Its displays are the only true eye contact solutions on the market, making them especially powerful in one- on-one conferences. The rest of its product line provides several other advantages as well, including: Public / Private: Public (NYSE: HPQ) • The DVE Telepresence 50 can immediately improve existing deploy- Key Executives: ments of traditional videoconferencing systems by providing true Vyomesh Joshi, Executive Vice President, Imaging and Printing eye contact, hiding the camera and enhancing image quality by Group (IPG) improving image contrast. Steve Nigro, Senior Vice President and General Manager, Graphics and Imaging Business (GIB) • In my opinion, the DVE Executive Telepresence System (ETS) Ken Crangle, General Manager, Graphics and Imaging Business (GIB) offers the highest quality experience currently available in a Ray Siuta, Marketing Manager, Halo Collaboration Solutions 46
  • 47. Telepresence Company Profiles With $86.6 billion in 2005 sales and $2.39 billion in net income, • 24x7 concierge-class connection support and help desk Hewlett-Packard is better known for its ubiquitous printers, multi- support function machines, personal computers and network servers than visual collaboration. For now. The company teamed up with • Proactive monitoring, remote diagnostics and management, DreamWorks in late 2003 to perfect and take to market a visual on-site equipment maintenance collaboration system the studio designed to help it produce animated films between its multiple campuses and partners. HSL’s Analysis The HP Halo Collaboration Studio launched in December 2005 I give HP a tremendous amount of credit for being the first and has quickly built a strong network of Fortune 500 customers, Fortune 500 company to realize the importance, potential and including: AIG Financial Products, AMD, BHP Billiton, DreamWorks, profit opportunity of effective visual collaboration and getting General Electric Commercial Finance, PepsiCo and Novartis. themselves into the big game. While this first-generation system is definitely pricey, HP appears to be doing more R&D than anyone At 17’x21’, the HP Halo Collaboration Studio seats six else in the industry. The company has recently tripled the size of its primary par ticipants, with a secondary row of bench seats that telepresence lab in Corvallis, Oregon, and boasts a tier-one team of can comfortably accommodate up to an additional six. The Halo-devoted technologists. I was especially impressed with Mark participants face three 50-inch plasma displays, each of which Gorzynski, Halo’s Chief Scientist. Future collaborative formats from display up to two remote par ticipants in site-to-site call or up HP promise to address other spaces and sizes to compliment the to four par ticipants per screen in a multi-point call and a fourth growing network of Halo Studios. screen for data collaboration. The Halo Studio itself is a superb first effort. The look and HP Halo Collaboration Studios include: feel of the room is warm and inviting. Though engineered, the environment conveys a natural experience with an excellent • DVD quality, MPEG-2 codecs with professional grade 16”x9” consistency-of-quality between all locations on the Halo Network. cameras Also, the simple interface and ease-of-use of the collaborative tools outshines those of rival environment providers. • High-resolution document camera, HD collaboration display with high-bandwidth VGA connections to the collaborative PC and But the company’s strongest asset is its growing network of participant laptops Fortune 500 companies using Halo — 60 locations installed or under construction (23 at HP and 10 at DreamWorks). Between • Life-sized multi-point (up to four locations) with no perceived HP itself and PepsiCo (with 16 brands that each do over one billion delay between inter-continental locations. dollars in business ) alone, it is a good bet that executives from vendors and partners will see real value in being “right down the • Power and network connections at each position hall” and collaborating in real time. • Site survey and on-site installation However, as virtually every other analyst has said of Halo, the price presents a barrier. For large, geographically-dispersed Fortune This engineered environment precisely positions cameras, 500 companies I believe that the ROI is definitely there. But as you displays, and the table down to millimeter tolerances and achieves go farther down the Fortune 2000 ladder, the cost gets harder and a superb “consistency-of-quality” between studios with studio- harder to justify, especially for the limited capabilities of version quality acoustics and lighting. one. To HP’s credit, however, it’s rolling out a free upgrade to their initial customer that fixes the lack of multi-point capabilities. As The cost of Halo varies depending on the number of studios a standard business practice, HP retrofits its customer base with purchased. In smaller quantities, the rooms are approximately new services and capabilities such as multi-point, as they become $425,000 each, and pricing falls the more rooms you buy. In the available. These enhancements come at no extra charge beyond United States and most global business centers, the network and the monthly service fee. Hopefully the company will introduce service fee is $18,000 monthly per room, which can varies in other backwards compatibility with traditional videoconferencing and countries depending on local telecommunications costs. HP offers high-definition as well. Versions two and three will present the real several lease options through its HP Financial Services subsidiary. tests for HP, but if the company shows the same innovation it’s already displayed in so many aspects of its other businesses, its The monthly fees cover: early adopter customers likely won’t mind having kicked in a little extra to help the effort. • HVEN ( Halo Video Exchange Network ) HP’s private, secure high—bandwidth, full duplex, QoS IP network 47
  • 48. Telepresence, Effective Visual Collaboration and the Future of Global Business at the Speed of Light Company: MedPresence MedPresence’s IP network and concierge/help desk services Company Website: start at $5,750 per month for the two-screen 200 series and Company Founded: 2005 $8,500 per month for the four-screen 400 series. Employees Dedicated To Visual Collaboration: N/A 2005 Revenue: N/A The technical specifications of the MedPresence Conference Public / Private: Private Room, Operating Room and Mobile unit can be found in detail in the company write-ups for Destiny Conferencing and the Polycom RPX on pages 44 and 49, respectively (they share the same video codec and audio platform), so I will focus on details specific to the MedPresence version. The MedPresence solution delivers medical informatics into the environment, including operating microscopes, X-Ray/CAT scan imagery, patient history, physician notes, anesthe- Key Executives: siology data and basically any other diagnostic data being used in David Allen, Chief Executive Officer the operating room, all under the umbrella of an integrated medical Brian Kinne, President informatics platform. MedPresence is a spin-off of Destiny Conferencing/TeleSuite, HSL’s Analysis which worked with a team of neurosurgeons at Barrow Neurological I had the opportunity to attend the public unveiling of the Institute in Phoenix, Arizona to design a telepresence solution for MedPresence solution at Barrow in January and observed both a surgical education. The team at Barrow included world-renowned spinal cord surgery and brain surgery conducted by Dr. Spetzler neurosurgeon Dr. Robert Spetzler, the director of the institute, from the MedPresence Conference Room. I’m still amazed at the and Drs. Stephen Papadopoulos and Shahram “Shez” Partovi, with experience to this day. The good folks at Barrow were kind enough substantial funding by telepresence/MedPresence investor Karl Eller to let me and the Lab’s videographer to scrub up and enter the as a gift to Barrow, whose work he has long supported. operating room during the spinal cord procedure to understand and document the interaction the operating room has with the remote Unlike traditional telemedicine solutions that focus primarily on sites during an operation. (Our video is available at the Lab’s website: displaying the local area of the operation, MedPresence connects one of its telepresence conference rooms to its solution for the operating room giving participants a panoramic view of the entire I was also able to spend time with Drs. Papadopoulos and procedure and the surgeon a view of and interaction with the Partovi, who explained the revolution this capability brings to both conference room. Medical students, peer physicians and medical surgical education and the ability for Barrow, with its very rare solution partners can view the equipment being used, the pace of and specialized institutional knowledge, to assist globally in delicate the procedure and even the demeanor of the participants. Each user operations where life, mobility and/or brain function could be views the operating room via a 4’x16’ video wall with the local view riding on the outcome. of the operation and medical imagery/informatics displays on high- resolution monitors between every two positions in the conference With a MedPresence solution already installed at the room and/or the outer two panels of the video wall. Translational Genomics Research Institute (TGen) and the company reporting 14 operating rooms and eight conference rooms on order MedPresence has also developed a mobile unit with a 4’x8’ from a variety of institutions, including the Arizona Heart Institute video wall that deploys from an integrated shipping crate. The and Arizona State University, it appears this capability will spread mobile unit can be shipped to a medical school, teaching hospital rapidly among the approximately 2,500 teaching hospitals globally. or surgical conference and then hooked up to an appropriate The medical community is poised to be the first to create a strong IP network, where it can then be connected to a MedPresence network of “content” available, with instruction from Barrow in Operating Room(s) or Conference Room(s) for surgical education, Neurological Surgical Education and Genomics expertise from TGen consultations or routine medical check ups globally. already on-tap. It appears that other institutions with expertise in cardiology, orthopedics, oncology, pediatric surgery, etc. will soon The MedPresence solution consists of three components: join in creating a growing network where world-class expertise in a variety of disciplines can quickly be accessed and shared. Universities • MedPresence Conference Room (MCR 400) — With seating with medical schools will have the ability to utilize their MedPresence options ranging from four ($250,000) to 28 ($599,000) conference rooms in other fields and departments so they can share • MedPresence Operating Room (MOR 400) — With options for knowledge and instruction across a wide spectrum of disciplines a stainless steel portable unit to a rear projection video wall, the adding value to the network as a whole. cost of the MOR 400 ranges from ($250,000) to ($449,000) Without a doubt, this technology has the ability to save lives, • MedPresence Mobile Unit (MM 200) — The MM200 comes improve medical diagnosis and outcomes, and revolutionize the delivery complete with a mini-conference table with embedded monitors of medical education and healthcare services globally. As I predicted two and a 4’x8’ video wall that collapses into its own shipping years ago as a TeleSuite employee when we initially began developing crate ($200,000). this capability, this one looks like a grand slam home run. 48
  • 49. Telepresence Company Profiles Company: Polycom • Voice-activated, or traditional videoconferencing “Hollywood Division Website: Squares” multi-point format available for both 200 and 400 series Company Founded: 1990 • Power and network connections at each position Employees Dedicated To Visual Collaboration: N/A 2005 Revenue: $580.66MM • Site survey and on-site installation Public / Private: Public (NASDAQ: PLCM) The Polycom RPX can be run as a stand-alone system using a company’s internal network, or it can also be purchased with optional RPX VNOC and Circuit Services (concierge class service and an overlay Quality-of-Service IP network). This network currently provides connectivity to Destiny Conferencing’s customers, which include PricewaterhouseCoopers, 3COM and AOL among others. HSL’s Analysis While it only took Polycom three years to catch on to the fact Key Executives: that telepresence solutions have spectacularly better end-user satis- Robert C. Hagerty — Chairman, President, and Chief Executive faction and usage than traditional set top videoconferencing, they Officer Steven C. Huey — Chief Marketing Officer finally made it to the party in a big way. Striking a deal with Destiny Craig Lynar — Vice President, Solutions Marketing Conferencing locks up the only manufacturer of telepresence envi- ronments in the world outside their main competitors (HP Halo Polycom, the market leader in traditional videoconferencing, and Teliris). If Tandberg, Sony, and/or Aethra want to get into the brings a complete portfolio of solutions to the emerging telep- business of group telepresence environments, they’ll need to start resence industry with 42 percent of the group videoconferencing from scratch and face intellectual property hurdles to do so. market and strong institutional knowledge and intellectual property in IP/ISDN video, voice, data collaboration, and videoconferencing The Polycom RPX solution also has a lot going for it: network management/scheduling. • The modular “room-within-a-room” environment doesn’t require The company announced the Polycom RealPresence Experience any permits, minimum facilities make-ready, and can be moved (RPX) on May 22nd, 2006, the result of a strategic partnership relatively easily should a company relocate a facility or deploy a with Destiny Conferencing, whose TeleSuite product line was the temporary suite to support a project or joint venture. original commercially-available group telepresence solution. The • With Polycom’s standards-based VSX 8000 videoconferencing RPX was specified from the market-proven strengths of Destiny codec platform, RPX suites are compatible with legacy video- Conferencing’s telepresence environment and Polycom video codecs, conferencing equipment — a capability that HP Halo still lacks. audio technology, and data collaboration tools. Polycom customers will have the option to utilize a Polycom Branded Conferencing • Polycom RPX customers can connect to Destiny Conferencing’s network and concierge/help desk services provided by Destiny existing network of Fortune 1000 clients, which is, by my calcula- Conferencing, which connects them to the second-largest effective tion, the second largest effective visual collaboration network on visual collaboration network after Teliris. the planet after Teliris. The Polycom RPX is available in six initial configurations, its • The ability to seat 28 participants in an effective classroom setting options ranging from four participants facing a 4’x8’ video wall for also separates them from the pack. Effective distance education $249,000 to a 28-participant environment facing a 4’x16’ video (for both universities and corporate training/on-going education/ wall for $559,000. certifications) will be a key application in the coming years, and the Polycom/Destiny Conferencing product line boasts the only Polycom’s RPX VNOC and Circuit Services (network and concierge/ large-capacity classroom solutions on the market. help desk services) start at $8,000 per month for the two screen 200 series and $12,000 per month for the four-screen 400 series. The biggest drawbacks to the RPX? Its lack of a high-definition codec solution (the company reports it’s in the works) and the Polycom RPX solutions include: problem of eye-contact among participants in the larger 400 series • Polycom VSX 8000 video codecs environments. While the participants closest to the center of the room have an excellent approximation of eye contact with the • Polycom EF 2241 Vortex Automatic Mic / Matrix Mixer with participants closest to the center of the room at the remote site, the Phone Hybrid and Power Amp effect is lost as you move out to the left and right of the center seats • Polycom People + Content IP Data Collaboration Tools because of the position of the camera.This is not a significant issue in • Life-sized multi-point larger classroom settings or for small meetings of one to four, but for • Three Sites — RPX 200 Series meetings of six to eight on each side, it can become annoying. • Five Sites — RPX 400 Series 49
  • 50. Telepresence, Effective Visual Collaboration and the Future of Global Business at the Speed of Light Company/Division: Telanetix Telanetix Network Services provide QoS, IP multicast-enabled Company Website: network connections starting at $3,500 per month for 5MBS of Company Founded: 2001 QOS bandwidth. The company also provides a 24 x 7 help desk as Employees: N/A part of its service for an additional $500 per month. 2006 Revenue from VC: N/A Public / Private: Public (OTC TNXI.OB) HSL’s Analysis I found Telanetix to have good video and audio quality with the lowest price point out of all the systems with multiple video streams, life-size par ticipants and hidden eye-level cameras. The Telanetix solution was also the least expensive group system that we reviewed which is impor tant for those organizations where six-figure solutions are not an option. I Key Executives: also found the system controls easy-to-use, with the ability to Thomas A. Szabo, Chairman and Co-founder launch calls and share data simple and intuitive. Bob Alford, Chief Architect and Co-founder Rob Arnold, Chief Technology officer and Co-founder I was also impressed that Telanetix choose to par tner Rick Ono, Chief Operating Officer with Savvis Communications for its QoS network solution that suppor ts IP multi-cast. In a previous life, I headed a Founded in 2001, San Diego-based Telanetix started shipping sales organization at Savvis that specialized in building QoS systems in 2005. The company has eight sites installed with an network solutions for the financial industr y for trading floor additional five on order. Unlike the other providers of telepresence technology and market data applications. The quality of the solutions (with the exception of Polycom which manufactures Savvis network for delay-intolerant IP video helped inspire its own codec), Telanetix is unique in that it has developed its my original research into effective visual collaboration and own proprietary MPEG-4 codec and networking platform that eventually telepresence. Savvis’ ability to layer in additional supports multiple video streams, allowing it to provide a relatively network ser vices — including Internet and VPN on the same inexpensive solution compared with most other providers connection — without affecting the quality of the video that must integrate multiple codecs and a premise router from reduces the operating costs for companies that choose to get other providers. their network ser vices from Savvis as well. Another difference is that Telanetix distributes its systems Telanetix lacks in some areas, however. Not having a through high-end audio-visual systems integration firms that then complete turnkey solution that addresses lighting, acoustics integrate the base Telanetix technology package into a range of and par ticipant placement hinders it from providing a consis- options individually designed to the customer’s specifications. tency-of-quality among all Telanetix rooms. The company says Telanetix customers have a choice of different display sizes and its network of AV par tners could develop such as solution options, and their system integration par tners can construct for any customer who wants it, but I believe they should get engineered environments that address lighting, acoustics and an engineered environment on the menu and the sooner par ticipant placement. The company’s announced AV par tners the better. Additionally, high-definition seems to be a ways include Avidex, Audio Video Innovations (AVI) and Audio Visual off for the company, and its compatibility with traditional Systems (AVS) videoconferencing is limited to integrating in an additional videoconferencing endpoint that seems somewhat kludge. The Telanetix Digital Presence Conferencing Solutions range from two screen systems that start at $39,550 and four screen systems at $45,383. Solutions that require more than four screens are quoted based on the number of screens. The base Telanetix system consists of the following components: • Linux-based, multi-stream MPEG-4 codecs and IP networking platform. • Fixed-position camera hidden at eye-level for an approximation of eye-contact with remote participants. • Life-size multipoint with up to nine locations using IP multi-cast (limited to the number of screens deployed by the customer I.E. four screens = nine locations) 50
  • 51. Telepresence Company Profiles Company: Teliris The cost of a GlobalTable installation ranges from $164,000 Website: for a standard three-screen system to $280,000 for a high- Company Founded: February 2001 definition version. GlobalTable Access, the company’s executive Employees Dedicated to Visual Collaboration: 40 solution starts at $63,000 per room and larger GlobalTable and 2005 Revenue: N/A GlobalTable VirtuaLive/VirtuaLive 360° environments can run Public/Private: Private north of $300,000 depending on the number of screens and options. Recurring operating costs run from $3,500-$12,000+ per month, per location, depending on the type of system and network costs in the country of installation. The recurring costs include: • InfiNET — Teliris’ secure, high-bandwidth, low-latency Quality-of- Service IP network Key Executives: • Proactive remote monitoring of the audio/visual and network Martyn Lewis, Chairman devices in the environment Marc Trachtenberg, Chief Executive Officer • Concierge reservation support, help desk and regular health Steve Gage, Chief Operating Officer checks/equipment maintenance Jamie Thomson, Managing Director HSL’s Analysis Teliris was founded in February 2001 as an off-shoot of Mycroft, a New York City-based networking and IT security company, and With over 110 sites installed or on order, a large network of Global Intercasting, Ltd., a UK-based corporate communications Global Fortune 2000 customers and a fourth generation product and design/integration firm. The company has been shipping its coming out this fall, Teliris seems well positioned to ride the telep- GlobalTable group telepresence solution since October 2001. Teliris resence wave generated by HP, Polycom, and Cisco’s entrance into GlobalTable customers include: BP, Euronext, GlaxoSmithKline, 3i, a market that has so far remained the best kept secret in telecom- Pearson plc, Lazard, Vodaphone, Xchanging and The Royal Bank of munications. With a strong background in internetworking and IP Scotland, among others. security, the company has built a scalable, carrier-grade network platform for managing and monitoring high-bandwidth interactive GlobalTable appears to lead the pack in installed customer video that is also backwards compatible with legacy videoconfer- locations, with over 110+ sites either in place or on order, making encing end-points. No small feat. It touts a system and network Teliris the commercial leader in the space. Available in a number uptime reliability of 99 percent and an SLA to back it up, giving of multi-screen configurations, ranging from four to sixteen seats, prospective customers confidence that the GlobalTable solution is the Teliris GlobalTable can also be integrated into larger environ- going to work as advertised. ments. As a compliment to its larger product, the company offers single-screen personal and executive solutions that executives can The company’s customer base remains one of its strongest operate from their offices. GlobalTable also provides backward assets, especially as more and more users realize the value and compatibility with traditional videoconferencing endpoints. potential for inter-company business. As the partners, vendors and customers of Teliris’ clients begin to seriously evaluate telepres- GlobalTable installations include: ence solutions, they’ll surely find sitting around the GlobalTable with their friends an attractive option. • High-quality, MPEG-2 or MPEG-4 video (true high-definition optional) • Full-size, multi-point (up to six locations) with Teliris’ proprietary With a true high-definition system at a price point at almost half VirtualVectoring technology (discussed in more detail in the paper) the cost of a non-high definition HP Halo Collaboration Studio, the company is strongly positioned price-wise against its newest and much • Data collaboration screen and presentation sharing. better known competitor. The company is also developing a solution • Simplified, touch-sensitive control for volume and collaborative tools. for the movie and animation industries with a stand-up presentation capability and large video wall for storyboarding that looks promising. • Site survey and on-site installation. It is also working on several solutions that integrate tools for collab- • Options include: audio conferencing add-in, multi-site document orative research and development between remote facilities in replication, DVD integration, 2D Cam, 3D Cam, stand up presen- pharmaceutical research and other specialized applications. tation, digital flip charting/storyboarding, lectern, encryption, and full redundancy among others. The company’s VirtuaLive 360° offering which is just coming into deployment adds a stand-up presentation capability that the Unlike the HP Halo Collaboration Studio and Destiny other vendors in the space have so far failed to address. I have seen Conferencing’s TeleSuite Systems, which essentially install a “room an R&D version of Teliris’ fourth generation display system, due out within a room” with a uniform look and feel, the GlobalTable this fall, which provide a more seamless and immersive display and solution has more flexibility in its room size. The final design can the company has been working on a camera technology for over match corporate aesthetics. a year and ½ which promises to more seamlessly stitch together multiple video streams. 51
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