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The Wainhouse Research Bulletin ONLINE NEWS AND VIEWS ON VISUAL COLLABORATION AND RICH MEDIA COMMUNICATIONS Happy Holidays to All from Wainhouse Research This will be our last newsletter for 2001. It’s been a hectic few weeks back here in Boston – we’ve published three new reports, two surveys, and are preparing to expand our consulting and publishing activities. Details coming next month. 2001 has been successful for the WRB too – we began the year with 3,500 names on our email list, and are ending the year at 6,500 – although the average number of bulletin downloads from our web site is now over 17,000 per issue. We will return next year with expanded news and editorial coverage, a new seminar series we will be taking on the road, more feature stories on all things conferencing, and entertaining interviews with industry heavyweights and lightweights alike. We would also like to extend a special thanks to the generous enterprises who have sponsored this newsletter during 2001, our first full year of operation. Their support has been invaluable. You will see in our next issue that for 2002 we have many returning sponsors as well as a cast of new sponsors. As always, please feel free to forward this newsletter to your colleagues. To be added to our automated email distribution list, simply visit www.wainhouse.com/bulletin. SUBSCRIBE NOW! IT’S FREE! Andrew W. Davis, [email protected] Polycom acquires ASPI Digital Polycom has purchased Atlanta Signal Processors Inc. (ASPI Digital), a manufacturer of voice system products for $5 million. The acquisition is intended to bolster Polycom’s voice product line by adding custom-room environment and large conference area technology to its existing table-top voice solutions. ASPI Digital focuses on voice products for the “installed” (I call this rack-mount) voice and videoconferencing markets, with technologies such as noise cancellation, multi-channel acoustic echo cancellation and automatic microphone mixing for large conference locations. ASPI Digital's product development and marketing teams will remain based in Atlanta and will continue working with and supporting existing partners. Here’s What I Think There are at least three messages to be uncovered in this announcement. The first is that Polycom is very serious about the voice conferencing business. Audio conferencing hardware today basically comes in two categories – the table top products and the The Wainhouse Research Bulletin installed products – stuff that goes in behind the scenes with lots of help from integrators, audio consultants, and channel partners. Polycom has been dominant in the first category but weak in the second. The ASPI acquisition is a move to fix that weakness. It also gives Polycom an integrator product to complement its VS 4000 rack mountable video product. Look for Polycom to move to strengthen relationships with key consultants, room designers, and A/V channels in general following this acquisition through its new Alliance Management Program. Second, the acquisition demonstrates that Polycom management continues to look for strategic financial moves to complement those of its product development teams. Third, I think this could be a warning shot across Gentner’s midships. Gentner dominates the installed audio market and has been expanding into Polycom’s table top audio and set-top video arenas. Now the bullet is coming the other way. Polycom has demonstrated over the years a mastery of distribution strategies and tactics. Now give them Page-1 Vol. 2 #48,December 18, 2001 some high end audio capabilities, throw in some wideband technology coming from the PictureTel side of the house, and couple that with Polycom’s already dominant position in video, and things could get very interesting for Gentner. ! [email protected] (Sunil Bhalla) TANDBERG Shifts Management TANDBERG has brought in a new president, Sverre Kjenne, previously the managing director of Eterra Norway. Bengt Thuresson, who has served as TANDBERG’s president for the past five years, returns to his previous role in TANDBERG as manager of R&D and product development. I haven’t met Sverre yet, but he joins a company that has been on a market tear for the past two years. And for those of you who can remember way back when, Bengt is a master at getting ten kroner of product R&D out of a 5 kroner investment. A management change at TANDBERG – yes; a change in direction, probably not; an increase in velocity – probably yes. we shall see who turns into real paying customers – the real proof in the pudding. In another vein, MVC continues its drive into all phases of the conferencing market and has started a Certified Video Engineer Program to provide technical training for video and network administrators. CVE will launch early in 2002 as a two-week course covering both theory and practice of all things videoconferencing. The course concludes with an exam certified by the German chamber of commerce. ! [email protected] (Stephan Fischer) The Wainhouse Research Bulleting would like you to join us in thanking our 2001 sponsors who help keep distribution of the WRB free: Collaborative Systems LLC First Virtual Communications Genesys Conferencing Gentner Global Scheduling Solutions InView Ivron Systems PictureTel Polycom RADVISION Ridgeway Systems and Software TANDBERG V-SPAN VBrick Zydacron MVC and VNP in Europe After having announced a strategic partnership with Forgent in June 2001, MVC's software development daughter MVC Business Solutions is now planning to become a system integrator dedicated to video network management with a strong focus on Forgent's Video Network Platform. In fact, MVC has already started a beta test program for VNP in Europe at five major enterprises including auto manufacturers, telecom providers, and one large chemical concern. These companies of course have been focused traditionally on ISDN networks, not IP. My sources tell me some of the beta sites have been using Forgent’s software to discover and catalog ALL the nodes on the network, not just the video nodes and to see how video network management software works with classical network management tools. VNP allows the video team to apply real network management solutions, and the distinct separation between both areas is clearly becoming smaller. The video team is gaining IT experience while the IT team is learning about video. Both sides have been impressed by the combination of discovery, alarm management, statistics, SNMP browsing, and scheduling. Now The Wainhouse Research Bulletin The fine print: Sponsorship of the WR Bulletin in no way implies that our sponsors endorse the opinions expressed in the Bulletin. Nor does it imply that the Bulletin endorses their products or services. We remain an equal opportunity critic. One WR Bulletin Sponsorship is still available for 2002! See www.wainhouse.com/bulletin/sponsorship.html SnowShore Introduces N20 Media Server SnowShore Networks has introduced the N20 media server with carrier-scale media processing power and a native IP architecture, allowing the device to support the scalable deployment of real time voice and rich-media converged applications. Devices like the N20 were discussed at the Wainhouse Research Summit in Boston last July after a presentation by SnowShore’s president Joel Hughes. The N20 is an Page-2 Vol. 2 #48,December 18, 2001 IP-optimized media-processing platform that accesses and manipulates dynamic web content across the network and integrates it in real time with voice services. The N20 media server also supports the deployment and evolution of existing legacy services from the PSTN onto IP networks. The philosophy behind the N20 according to SnowShore is that next-generation networks are only as valuable as their ability to allow carriers to quickly and economically shape and scale enhanced services that meet customers’ highest service-quality expectations. SnowShore Networks has also launched a partners program to get software developed on and ported to the N20. ! [email protected] (John Gates) More SMART News from Canada SMART Technologies has been real busy lately. Since our last newsletter (November 28) the company has announced the In-Wall Rear Projection SMART Board 2860, an interactive whiteboard that simplifies in-wall installation and requires less meeting room space; two new SMART Board for Plasma Displays models for collaboration using plasma display panels (PDPs); and SynchronEyes 2.0 for Macintosh, software that uses a TCP/IP network to create a focused learning environment where instructors can monitor and control up to 40 Macintosh workstations from a single computer (important in many education applications). SynchronEyes 2.0 is also available for Windows. The plasma display product is an interactive overlay powered by SMART Board Software that adds touch control and annotation capabilities, transforming a PDP into a powerful presentation and collaboration tool. ! [email protected] Virtela Communications & IP Video Networks I’ve just become of yet another IP network service provider taking a stab at video communications. Virtela is a new global managed IP VPN services provider now offering a video service (VirtelaVideo) within a fully-encrypted VPN environment that will support 768 kbps at the standard level and 2 Mbps on the premium level. The premium level also includes bridging and gateway services; all services The Wainhouse Research Bulletin appear to be on a flat-rate monthly billing. The company also offers an enterprise VoIP service, VirtelaVoice. Virtela's core VPN service ranges in price from $300 to $1,500 per month for each U.S. site, including local loop charges. International locations typically cost from $500 to $4,000 per month for each site, including local loop and the same features as domestic locations. This replaces legacy (Frame Relay) site-to-site connectivity, the need for separate Internet access for each location, and ISDN for videoconferencing. VirtelaVideo is an incremental charge of $500 per month for each U.S. site for unlimited use; $1,000 per month for international locations. This fee includes all videoconferencing hardware (including the TV), policy management and 24x7 NOC support. VirtelaVoice is an incremental charge of $200 per month for each U.S. site for unlimited use (supports approximately 100 simultaneous calls within a T1 environment); $300 per month for international locations. Both VirtelaVideo and VirtelaVoice applications are also available independent of Virtela's VPN services. Andrew is trying to schedule a demo for Wainhouse Research. ! [email protected] (Jane Morrissey) EDS enters Video Network Services Business EDS has launched a managed video solutions business based on FVC’s Click-to-Meet platform for voice, video, and data collaboration and streaming. According to the plan, EDS intends to leverage its global presence and alliances with hardware and software vendors and Internet Service Providers (ISPs) to offer seamless video services to enterprises of any size. The solution supports IP, ISDN and ATM protocols and is endpoint independent and is available with fixed monthly pricing. T he Wainhouse.com Web Link Database: Over 17,000 click-thrus served ! Our categorized, searchable Industry Web Links database now contains over 375 Internet web links, and if your favorite link isn’t there, submit it! Bookmark www.wainhouse.com/links Page-3 Vol. 2 #48,December 18, 2001 New Reports From Wainhouse Research Just in time for the holiday gift giving season, Wainhouse Research has completed volume 3 of Conferencing Markets & Strategies (CM&S) - 2001, our comprehensive coverage of the conferencing market. Volume 3 covers the services industry – the audio, video, web & streaming conference services and includes coverage of 30 leading and 20 additional CSP companies, and a comprehensive five-year forecast. Our current set of reports now includes: • CM&S Vol 1, Multimedia Networking Infrastructure Products (Mar-01) • CM&S Vol 2, Video and Web clients for Group and Personal Conferencing (Oct-01) • CM&S Vol. 3, the Conferencing Service Provider Industry (Dec-01) Polycom Charges into VoIP Polycom has made several moves in the voice-overIP market in recent weeks. In the first, the company announced the availability of is first standards-based VoIP conference phone, the SoundStation IP 3000, that integrates with the Alcatel IP PBS, the OmniPCX 4400. In the second, Polycom announced the availability of is SoundPoint IP 400 VoIP phone for Artisoft’s TeleVantage IP telephony software (softswitch). Relationships like this are key in the VoIP market because customers want total solutions that have been stringently tested and integrated and that provide a rich set of features and reliability. So the handset and the PBX have to be made by the same vendor or “blessed” by the two vendors if they are different. Polycom also has a role in Cisco’s IP telephony phones as well. For those of you who don’t know, Artisoft is a developer of open, standards-based telephone systems that bring together voice and data. TeleVantage is designed specifically for small to midsize businesses, corporate branch offices, and call centers and enables remote and branch office users to seamlessly interact with their TeleVantage phone system at a corporate location using IP technology. TeleVantage enables both traditional circuit-based and VoIP switching on the same system. This allows a company to add IP telephones incrementally and only where needed rather than throughout the company, reducing up-front costs in the transition to VoIP. It also enables businesses with multiple sites to reduce the cost of longdistance calling by routing calls inexpensively over IP networks. ! [email protected] (Sunil Bhalla) iPower Gains Embedded MCU • Microsoft Messenger for Windows XP (Nov-01) • Implementing IP Rich Media Conferencing – A Pragmatic Guide for the Business Manager (Dec-01) Complete details, including a free executive summary, table of contents, and ordering information are available at http://www.wainhouse.com/reports The Wainhouse Research Bulletin Polycom has announced a software MCU for the iPower series of PC-centric videoconferencing systems (900 Series only). The software option has a list price of $3,000 and gives the endpoint a 4-port multipoint capability (itself plus three remotes). The bridge support IP only, not ISDN, and up to 768 kbps per port with either continuous presence or voice activated switching. With the image share device, all of the endpoints on a multipoint call can see the live images, with motion. Page-4 Vol. 2 #48,December 18, 2001 Brinckmann Launches IPNexus Zydacron and XP Brinckmann & Associates, a software developer focused on enhancing IP-based multipoint videoconferences, has introduced IPNexus, software which the company dubs an Integrated Collaboration Environment (ICE) – a term we have been using at Wainhouse Research for two years – that integrates instant messaging, application sharing, screen snapshots with collaborative tools, sticky notes, group polling, email and file distribution, and launching of videoconferences and audio conferences through an MCU in a secure, controllable environment. Zydacron has added Windows XP support for its desktop videoconferencing products for both ISDN and IP. Version 3.0 of the company’s software also supports Windows 98, NT and 2000. The IPNexus software is installed on a server located on the company’s internal network. The application can be isolated on an internal server or configured to be accessible by the public Internet through a single port assigned by the administrator. Wheeling & Dealing ! [email protected] (Fred Tolar) WebEx Goes Multilingual WebEx Communications is now offering multiple language interfaces for its Web conferencing services. WebEx is the first Web conferencing service to allow every participant within a meeting to select a different language preference. Compunetix has opened a Hong Kong office. First Virtual Communications has established a Japanese subsidiary, First Virtual Communications Japan KK headquartered in Tokyo Polycom announced that they shipped their one millionth conference phone (they recently also shipped their 100,000th ViewStation) Our first Summit was a stimulating, exciting, sometimes-controversial sellout, and has generated strong interest in a follow-on event. The theme for 2002 is “Achieving Success with Rich Media Conferencing” and will focus on end users of all types who are deploying audio, video, and web conferencing solutions and how they are using the technology to gain advantages. Wainhouse Research is looking for some interesting end-user speakers from all types of large and small enterprises, plus a select number of experts to shed light on the remaining mysteries. We are happy to report that sponsorships are SOLD OUT. Details on the proposed meeting agenda are on our web site at www.wainhouse.com/summit. [email protected] Applied Global Technologies reports that its engineers recently returned from Kuwait where they installed a Polycom Accord MGC 100 at Camp Doha for U.S. forces stationed there. The MCU is being used to support secure bridging of Army Central Command forces in the Middle East. The company is also supporting videoconferencing for the Third Army operations center in Georgia which enables the army to conduct real-time operational conferencing 24 hours a day/ 7 days a week with deployed forces in the Mid-East. According to a report we ran into from Jupiter Media Metrix, the use of Instant Messaging (AOL IM, MSN Messenger, and Yahoo Messenger) is up 110% in the US enterprise comparing September 2001 to September 2000. 13.4 million users, up 34%, used 4.9 billion minutes. Imagine if we had 13.4 million videoconferencing users! PlaceWare has raised more than $30 million in an over subscribed private placement financing. SnowShore Networks landed $5.6 million in venture capital from international VC firm 31. The Wainhouse Research Bulletin Page-5 Vol. 2 #48,December 18, 2001 Centra has announced that Deutsche Telekom, Europe's largest telecommunications company, has standardized on its real-time Web collaboration and eLearning platform to deliver interactive, online training to thousands of internal employees. VNCI announced recently that it intends to lay off 30% of its employees and to implement a 10% salary reduction for all remaining employees. Videoconferencing reseller MCSi Inc. has filed to offer 4.5 million common shares and use most of its proceeds to repay a portion of a credit facility. The European Space Agency has chosen Aethra to supply 24 videoconferencing systems in seven cities in Italy, France, Germany, Netherlands, Russia, and Spain. Continuing its streak of acquisitions, Wire One Technologies has acquired certain assets of the technologies division of Axxis for just over $2 million in Wire One stock (321,000 shares). Based in Louisville KY (home of the basketball cardinals), Axxis will strengthen Wire One’s Midwest presence in the enterprise videoconferencing solutions and integration markets, complementing the recent acquisition of AAC. This division of Axxis apparently did just over $10 million in business in the past twelve months. E.mergent, Inc., formerly VideoLabs, has retained an investment banking firm to help it evaluate strategic options, including the possible sale of the company. The company does business in two segments – a Products Division, which designs, manufactures and markets a complete line of peripherals that support core technologies in the videoconferencing, audio/visual, identification, education and medical markets, and a Services Division, which is a full-service communications integrator specializing in the design, installation and support of meeting room technologies. Holding its first worldwide reseller meeting since the PictureTel acquisition, Polycom claims record attendance at the Palms Springs meeting held in early December with over 400 channel partners from 153 different organizations attending. Approximately half were from outside the US. The Wainhouse Research Bulletin Forgent (VTEL) Fiscal Q1 VTEL Corporation, doing business as Forgent reported the results for its first quarter of fiscal 2001, the three month period ending October 31, 2001. Revenues were $8.466 million, down 5% from the previous quarter’s revenues of $8.925 million. Forgent is reporting revenues in two categories – services ($5.6 million this quarter and $5.98 million last quarter) and integration ($2.86 million this quarter and $2.95 million last quarter. The company considers itself to be so different from what it was last year at this time that it is not comparing this quarter’s results to those of the same quarter last fiscal year. I however, have taken the liberty of going back to VTEL’s older earnings releases where they reported revenues as product revenues and service revenues, and have attributed the service revenues to be almost the same as what would be included in Forgent’s figures. Forgent (VTEL) Revenues** ($M) $14 VTEL Services Revenues $12 $10 $8 $6 $4 $2 $0 Q4/00 Q1/01 Q2/01 Services Q3/01 Integration Q4/01 Q1/02 Software Don’t misunderstand my graph. The first four columns are the reported numbers for VTEL’s services operation at the time of the earnings calls, the last two column are the Q4/01 and Q1/02 numbers as reported by Forgent a few weeks ago. Note that I have included a third category, software, which is all zeros right now, but I expect to see Forgent’s VNP software start to contribute to the revenue line next quarter. Hear WR on CNet’s AnchorDesk Radio Hear Wainhouse Research’s Andy Nilssen as interviewed by David Coursey on 12-Dec-01, topic: Microsoft Messenger for Windows XP. Real Player required; simply click here. Page-6 Vol. 2 #48,December 18, 2001 People & Places Compunetix, Sonia Soo, Regional Development Manager, Hong Kong Connex International, Bobbi Heyel has announced her retirement as President, Debora Volansky, President SnowShore Networks, Sue Agopian, VP worldwide sales. SPL Integrated Solutions, Townley Meyer, VP Sales for Strategic Markets TANDBERG, Sverre Kjenne, President; Bengt Thuresson, manager of R&D Forgent, Roy Wilson, COO; Bob Seidel, VP Sales; Nancy Harris, VP marketing; Sanjay Mishra, Director of VNP Professional Services Zydacron, Larry Hamilton, VP Engineering Genesys Conferencing, David Rosenberg, E-VP sales and marketing for North America; Kailash Ambwani, Chief Strategy Officer; Kim Mayyasi has resigned as CEO of North American Operations WR Bulletin Techie Tip Gentner Communications, Angelina Beitia, VP Marketing; DeLonie Call, VP Human Resources; Kevin Davis,VP Conferencing Services • Then select Edit # Preferences # General # Display ! Smooth Line Art (this is not the default) Motion Media, Max Arafa, sales manager for Europe; Fabien Letailleur, Country Manager for France and Belgium. Very nice. Polycom, Geno Alissi, General manager of iPower Video Communications Division The Wainhouse Research Bulletin For best viewing of your WRB … • Upgrade to Acrobat Reader 5.0 The Wainhouse Research Bulletin is published by Wainhouse Research LLC, 112 Sumner Road, Brookline, MA 02445. Tel 617-975-0297. Email to [email protected]. Free subscriptions are available at www.wainhouse.com. Copyright 2001 by Wainhouse Research. Page-7 Vol. 2 #48,December 18, 2001