In meetings with companies in the communications industry such as Polycom and many others, they tell me sales of video products have done very well these past years. Distributors and resellers tell me this category of product outsells just about everything else. This was especially true as fuel prices were increasing and travel budgets were being cut.
Although travel costs are receding, travel budgets will likely not be reinstated in a major way for some time. And during this economic slowdown, many expect video conferencing and telepresence to do considerably well as it allows people to communicate remotely in a manner that is similar to being live.
Consumers too are getting the hang of video and Skype execs tell me often about their increased video penetration. Just as importantly, consumers seem to love to ditch their PSTN connections. They are going gaga over VoIP services from the likes of the cable companies, AT&T, Verizon, Vonage and others.
If you read the above carefully, you may have noticed an opportunity which is worth pursuing... Consumer video-based IP communications or in laymen's terms, video Vonage.
The first thing which may come to mind as you read this article is Packet8 service from 8x8. The people from this company almost have more video patents than this article has sentences and they were early to the game. But timing is everything in life and while Paket8 has great video products the company has also been focusing on the SMB VoIP and SIP trunking markets as of late. To date, this is certainly where the money has been.
So a pure-play IP communications service provider is an interesting idea. If you had to come up with the ideal person to run such a company who would I pick? Someone who was picked as one of the Top Voice in IP Communications by Internet Telephony Magazine and someone who has seen the market progress over ten years and has a lengthy resume in the space.
One such person is Scott Wharton and he is a veteran. He worked at VocalTec - the company that launched the VoIP industry up until about ten years ago and spent the last nine years at Broadsoft a leading application server company. This past April he left Broadsoft, went to Silicon Valley and decided to start a consumer video company. In the summer he got funding and tomorrow morning he starts a new company called Vidtel which as you may have surmised is a pure-play consumer video service.
For $199, you get a Grandstream videophone which allows a predetermined zoom level and a quality speakerphone. Moreover, you can choose from two classes of services. The standard plan costing $14.95/month gives you traditional calling features, free directory assistance, call notification, do not disturb, unlimited video calling, video mail (with forwarding to your inbox), a traditional telephone number and E911. For $29.95/month you get simultaneous ring and unlimited calling in the US and Canada instead of having to pay for 3.9 cents per minute. I should mention that if you pay in advance, for $100/year you can get the standard plan and for $250/year you can purchase the premium plan.
Let's not forget that at this price point the SMB space may be very interested in using this service as well. After all, at $199 for a videophone and low VoIP rates, there is no risk - especially when you factor in the money-back guarantee.
Even though the phones have video screens, they act as traditional phones when not talking to another Vidtel phone. The screens also are capable of viewing XML feeds and you currently can see the latest headlines on the screen when you aren't using the phone.
The install is also dead easy. It is truly plug and play and firewall and NAT traversal issues did not appear at all. When the phones are plugged in they find the internet and start downloading the latest firmware. A few minutes later you are ready to go.
Wharton tells me his company wants to eliminate the walled garden approach so common in the world. So instead of keeping his phones talking only to other Vidtel phones, he is working to connect them to Skype, Google, mobile phones, desktops, corporate videoconferencing and other video solutions. With Wharton's background at Broadsoft helping carriers provide enhanced services, we can imagine that Vidtel service will see more and more rapid improvement.
The obvious question from the skeptics is why do we need this service when we have Skype. Great question and when you have a laptop with a built-in camera, Skype is pretty handy. If you don't have a laptop or don't have a camera on your computer or aren't computer savvy, Skype becomes less useful.
So the convenience factor is huge and more importantly, people are still adding VoIP lines around the world in massive numbers. Why wouldn't you pay a bit more and add video to your calls? It seems to me to be a no-brainer.
In my testing this past week, the service worked well. A few times the video stopped and the voice kept on transmitting with great quality. I would imagine this was a function of the bandwidth on our network at the time. I also received a single network busy during an outgoing phone call but the next time I tried to dial, five seconds later, the call went through.
Wharton thinks the time is now to launch this service. In a video interview via his service he seemed confident (and happy I might add - isn't video great?) as he told me trial customers are already buying new phones and the service hasn't officially launched yet. In addition, he mentions Moore's Law is going to only make the devices cheaper and they are pretty affordable now at $199.
And I agree. While Skype is easy to use, in my house the laptop seems to wander off on its own. If I want to find my kids, Skype doesn't always work and moreover the high-tech Logitech camera I use sits on a stalk and never seems to be connected to the computer. With Vidtel, I am pretty confident I will always find my kids nearby. This is more likely of course because the phone sits near the TV. I should also mention my kids are too young to be handling laptop configuration on their own.
In this economic environment, it is great to start a new business because it is just so much tougher for competitors to launch competitive companies. On the other hand, in a slow market people have less to spend. I do firmly believe that if you launch a company which solves problems people have, they will pay for it. Sometimes like the case with the iPod, the product solved a problem we didn't even know we had - the gadget became a category creator.
Vidtel has built the better mousetrap and can become a category creator as well -- the question is, will the world beat a path to it's door?
The next phase of this launch involves marketing and PR. Let's see how they do.
I can say in my long weekend of testing I really thought the service was useful and I hope Vidtel kicks off a new category of service provider and forces more innovation into the market. After all, Wharton knows this business well and knows what buttons to press to get consumers interested and to make competitors nervous.