“I can see for miles and miles”*

TeleSpan’s 2012 Predictions

Here’s what I think!

Wow!

This year, 2012, is the 32nd year for TeleSpan and our 17th annual predictions edition!

Amazing!

Can’t ask for more than that!

As for my predicting what will happen, out of the 160 predictions I’ve made since 1996 (10 a year), 113 have come true, giving me a batting average of .71 (71%).

Even I’m amazed at that average!

Okay, before I deliver this year’s predictions, as always I just want to be clear: where I predict that a company will be successful, I am indeed cheering them on. Where I predict that a company is going to fail, I am wishing it wasn’t true. Like you, we want to share in a successful growing industry. But, and you know my big but, some things, some ventures, simply won’t make it. With 30-plus years of watching this industry as closely as I have, I feel that my job is to tell you what is real, and what is not.

Ready? Okay, now the wind up, the pitch….

2012 PREDICTIONS

TeleSpan’s Prediction #1:

Skype video calls surpass hardware-based video calls by 2014

This one is so darn easy, that it’s almost a yawner! Look, we sell around 200,000 hardware-based group videoconferencing systems each year, so there are maybe 1.5 million of them in use—okay, maybe 2.0 million—generating calls. Skype just told us at this year’s Consumer Electronics Show (CES), that it now has around 80 million consumer/living room television sets enabled with Skype viewing equipment.

“But Elliot,” you say, “you’re predicting usage, not endpoints!”

Correct. But recall that in the CES edition of ET last week I told you that Skype now reports an average of 200 million Skype users online making calls at any one time, up from 170 million a year ago. And that now 50% of those calls are VIDEO calls. That equates to over 70 billion minutes of video calling in 2011. Think hardware-based videoconferencing generates anywhere near that each year?

I don’t think so!

TeleSpan’s Prediction #2:

Google takes on Skype/Microsoft in "free" video calling and overtakes Skype in two years.

Think Android OS vs. Apple Mobile OS Market Shares

Look, I just told you how Skype is growing and has a gazillion minutes of video calls, but, and you know my big but, I think Google will overtake Skype in a couple of years. It will do that with its Google+ and its Hangouts offerings, which, as I pointed out in my September 26, 2010 ET (pp. 2-3), is free, as in free.

Why do I believe that Google can overtake Skype, even as Skype is now a part of Microsoft?

Just look at Google’s Android share of mobile handsets. According to The Wall Street Journal, a small hometown newspaper, Google passed Apple for OS (operating system) market share of mobile phones in January 2011 with Android having a 26% share versus Apple’s 25%. By November 2011, while Apple’s share had grown to 27.4%, Android’s share had grown to 44.8%!

Google is tough!

Methinks Google will pass Skype in the video calling area, just like it passed Apple (and Blackberry) in the mobile/handheld market.

TeleSpan’s Prediction #3:

Cisco or Polycom buys Vidyo

Repeat after me:

There

Is

No

Market

For

Hardware-based

Video

Anymore!

Need I remind you how well Skype is doing (and soon Google will be doing) in video calling. What about Vidyo? It’s out there kicking, but it’s founded by folks who have been around the industry for a long time and know that its value is dinero, as in being bought.

Cisco bought Tandberg, and is growing Cisco’s business, but for how long can Cisco grow a hardware-based videoconferencing business?

Polycom’s hardware-based videoconferencing business, as we will reveal at TeleSpan’s 7th Annual Future of Conferencing Workshop, is going to die as well. Just check out Polycom’s announcement on January 18, 2012 of how Polycom going to focus its video offering on cloud-based services over broadband fiber. It’s what the company is calling the Polycom RealPresence Network (formerly the Halo®/HVEN network acquired from HP in 2011). When and if Polycom is successful, it will follow on with what it said in its press release, which I quote: “Polycom’s cloud strategy builds on the company’s goal to make video collaboration ubiquitous and is a key proof point of Polycom’s recently announced software strategy.”

Well, Polycom will need a strong software-based videoconferencing product to deliver on that “software strategy”… why not use Vidyo?

 TeleSpan’s Prediction #4:

American Capital sells Freeconference.com to major CSP who buys it for its customer list

As you may recall, American Capital purchased Global Conference Partners, a.k.a. Freeconference.com in 2006 for $47 million, a multiple of more than four times Freeconference.com’s revenues at the time. American Capital was betting that the “free” side of the business would continue to be profitable, based on what’s called “revenue sharing” of access charges, those “costs” paid by long distance carriers when rural phone companies connect their long distance calls to … well, they’re supposed to be connecting the calls to rural homes, but through Freeconference.com and other free providers, they’ve been connecting the calls to long distance conference calls. By holding conference calls, the revenues from access fees zoomed, and made the “free” side of our industry very, very profitable.

Well, spin the clock forward to 2011, and as you know, the FCC is ending this, by reducing the access fees to near-nada, and the future isn’t real bright for the free side of the business. That is, unless a new revenue model is found.

While the free folks are working diligently on this new model, I think that American Capital is going to get impatient, and will want to get some of its investment back and to back out of the conferencing field. To do so, I think it will accept a low bid from an existing large pay-per conference service provider (CSP), and get out. I think it could happen as soon as this year.

For an earlier story on the American Capital acquisition of Global Conference Partners, see Electronic TeleSpan, May 26, 2006, pp. 1-5.

For earlier stories on the FCC’s new decisions, see Electronic TeleSpan, November 14, 2011, p.1.

TeleSpan’s Prediction #5:

Collaboration grows as part of Social Networking

This one is a no brainer. Last year (see below), I correctly predicted that Facebook would enter the consumer videoconferencing space. Facebook has a deal now with Skype and others to deliver this form of collaboration to its more than 800 million regular users. I’m convinced that some, actually a lot, of those users want to collaborate with more than one person at a time, in real time, talking while sharing photos, (think conference calls and Webconferencing), in addition to their now Skype-enabled point-to-point and multipoint videoconferencing.

What prevents social networking providers, such as Facebook, from going further into our collaboration space?

Absolutely nothing!

TeleSpan’s Prediction #6:

Arkadin becomes one of the top 5 CSPs in audio

I must say I was not surprised by Arkadin’s purchase of ConferencePlus at the end of last year. I knew ConferencePlus was for sale. What I was surprised by was the size of the annual revenues of Arkadin: $170 million for the 12 months before the purchase. I knew about the company, but kept it below the radar in my Future of Conferencing data collection for our $3.6 billion a year conference call industry. Adding ConferencePlus’s annual revenues of $43 million to Arkadin’s revenue stream takes Arkadin to almost a quarter-billion a year!

Not a lot of CSPs with revenues like that.

I’m predicting that Arkadin will be one of the top five by next year … possibly by buying another CSP and adding its annual revenues to Arkadin’s top line.

TeleSpan’s Prediction #7:

Logitech goes deep into the living room

I know, I know, Logitech reviewed the results of Revue, and did not renew it after its poor performance during 2011.

Then, at CES, Logitech introduced a totally new concept, a high definition video codec INSIDE a $99.99 webcam for PCs and possibly for tablets. It’s called the Logitech HD Pro Webcam C920. I reviewed it last week in my CES edition.

What, I have to ask, prevents Logitech from taking that technology and moving it into the living room?

Nothing!

I mean, it’s got multiple microphones, built-in speakers, and works for folks sitting on hard office chairs as well as soft couches.

I think that Logitech will find this webcam, or certainly the technology behind it, as a way to profitably enter the living room.

TeleSpan’s Prediction #8:

Polycom enters “consumer” videoconferencing space, but falls!

During Polycom’s first-quarter earnings call last year, CEO Andrew Miller said that “consumer play” would come from Polycom in early 2012.

Well, this week, as in “early 2012,” Polycom announced a totally new strategy for the company, cloud-based videoconferencing.

Cliff Notes: Polycom wants to offer the fiber network it got when it acquired HP’s telepresence business to vendors wanting to sell videoconferencing, network included. Polycom is calling it “Polycom RealPresence Cloud.”

When Polycom gets traction there, it says it will make good on its previously announced “software strategy.”

Okay, enough geek-speak. ‘Tis my opinion that Polycom has finally realized that the software is on the wall, and not hardware, when it comes to videoconferencing endpoints. As such, the company will go in that direction, one that will lead it to believe that it can cater to the consumer marketplace. It justifies this by quoting Giga Om’s report, “The Consumer Video Chat Market 2010- 2015,” which says, “By 2015, the number of people participating in web-based video chats is forecast to grow 14-fold to more than 140 million, and they are expected to make 11 billion video chat calls that year.”

Sooooooooooo, Polycom thinks it can migrate with its resellers to the consumer video chat market?

I don’t think so!

I think if Polycom gets married to that market and goes to celebrate at Niagara Falls, it’s going to go over the falls.

For an earlier story on Polycom’s first quarter results in 2011, see Electronic TeleSpan, April 25, 2011, pp. 2-3.

TeleSpan’s Prediction #9:

Conference calls go to video … added for free … but it’s not used in business

We all know the story. Price per minute for voice-only conference calls is near zero, and the CSPs are trying everything they can to get new profitable revenue from those calls. Several, like PGi, Premiere Global, have introduced services that blend the formerly voice-only conference calls with Web and videoconferencing. PGi’s iMeet, as well as InterCall’s Unified Meeting, are examples that deliver all three media to your desktop.

As I’ve been holding the Future of Conferencing Workshops for the past six years, I, and the audience, have always nudged the CSPs to “add value” to their voice-only conference calls …because if they do so, they can charge more for their calls.

One way to do that is to bundle video, a move that I think will be made by several CSPs in the next year or so.

It will be attractive, it will add value, but frankly, I just don’t see folks using the video component … they like voice conference calls so they can multitask, answer e-mails, sometimes in their PJs, while on a voice-only call.

I think we’ll see the offering, but not a lot of folks taking the CSPs up on that offering.

TeleSpan’s Prediction #10:

One to three conferencing companies announce Unified Communications offerings to compete with Microsoft in the coming year

This is JD Vaughn’s prediction … here’s what he has to say:

CSP’s have realized that Microsoft Lync and other major UC players like Cisco, Avaya, IBM and Siemens are now targeting the millions of enterprise customers globally that work with the CSP’s today. Some carrier CSPs are reselling Cisco and Microsoft services today, including Office 365, but we predict that several non-carrier global CSP’s will launch competitive branded products this year (two or three will be announcing deals with Mitel).

Now if only they could all just agree on what Unified Communications means — but they at least now realize it ain’t just conferencing! And if you don’t believe me, go look at the last four companies acquired by Intercall’ s parent, West.

2011 PREDICTIONS

Okay, let’s see how the Crystal Bald did last year.

TeleSpan’s Prediction #1

Freeconferencing voice model reaches 30% of the market by 2012 due to Microsoft & Skype

Indeed, free minutes are more than double digits, representing nearly 15% of all North American conference call minutes as of mid 2011. That doesn’t include the conference call minutes from Skype, though, which I was unable to get in time for my annual Predictions broadcast. Sooooooooo, I’ll have to take a thumbs down for now.

That said, at TeleSpan’s Seventh Annual Future of Conferencing Workshop March 15 and 16, I expect to present more up-to-date data on this segment of the market, which did grow in 2011.

TeleSpan’s Prediction #2:

Tablet-based videoconferencing used by at least 15% of all users for some of their calls by 2013

We are getting all sorts of anecdotal data on the increased use of video on tablets, in particular in the medical field. Docs are walking around with tablets, gaining access to important medical records and images from X-rays etc., and are beginning to have “face-to-face” calls on those tablets.

We’ll discuss this at the Future of Conferencing Workshop.

For now, though, I’ll have to take a “sideways” on this prediction, as I said “… by 2013,” so I have another year to prove this prediction is correct.

TeleSpan’s Prediction #3:

Skype Videoconferencing used on long flights via Wi-Fi

I checked with Skype on this, and indeed, its customers are taking their laptops on long flights, and using Skype when international airlines are offering Wi-Fi on their trans-Atlantic and trans-Pacific flights. But these folks seem to be a little timid about holding a videoconference, seated next to someone who … might be a competitor.

Sooooooooo, for now, I’ll take a thumbs down on this one.

TeleSpan’s Prediction #4:

Senior centers & care facilities add Wi-Fi and consumer videoconferencing between parents and family members

Dang!

This is such a great idea, I wish I could have found some senior centers and care facilities that had implemented it this past year, but I guess with the concern over healthcare funding, they’re watching what they spend money on.

I, for one, have a neighbor in such a facility, and while I visit her several times a week, it’s hard on me, making the two-hour round trip to do so …. I would rather do it over a videoconference directly to her room.

As I said last year, “It may take a few years, but folks, it’s gonna happen!”

TeleSpan’s Prediction #5:

West InterCall or Skype IPO successful by end of 2011

Well neither IPO came about, but Skype did receive an IPO [Interesting Purchase Opportunity], which it accepted from Microsoft.

But, I said IPO, as in “initial public offering”… which didn’t happen in either case, so thumbs down.

TeleSpan’s Prediction #6:

Microsoft Lync goes after CSPs who fed it in the past

Last year, I pointed out that Microsoft which had been fed by the conference service providers (CSPs), who were reselling Microsoft’s LiveMeeting webconferencing product, wanted to (in my opinion) use its Lync product to go after these same CSPs. I quoted my November 15, 2010 edition of ET, and Microsoft’s press release, which stated, “The Microsoft Lync™ Server 2010 enterprise messaging solution, [helps] to reduce or eliminate the cost of third-party conferencing systems.”

Anecdotally, I’m hearing that Microsoft is going after the CSPs who fed it. But frankly I don’t have enough data on the dent Microsoft has made yet, so I’ll have to go sideways on this prediction for now.

TeleSpan’s Prediction #7:

Hardware-based videoconferencing all but disappears in this decade

I said “in this decade.” Unless you’re blind, you have to see this already occurring. But since I gave myself nine more years, I’ll take a sideways on this one for now.

TeleSpan’s Prediction #8:

AT&T fights back—bundles conference calls (voice, video, data) to fight Google and others

While AT&T did indeed fight back, and gained market share, it wasn’t enough for me to take a “thumbs up.” I think AT&T just isn’t being aggressive enough. It will get there, but for now, thumbs down on this prediction.

TeleSpan’s Prediction #9:

Facebook enters consumer videoconferencing space

Pat, pat, pat … the sound of me patting myself on the back.

Yup, as predicted, Facebook signed deals with Skype and with Social Eyes last year, adding video calling to its social networking offering.

Next!

TeleSpan’s Prediction #10:

Cisco’s ūmi fails

This was so darn easy to predict. As I said last year during the 2011 Annual Predictions event, “I must ask, would someone pay $24.99 a month for the service, when you can get Skype point-to-point video for free …?”

Yup, Cisco ended ūmi in December … so it “failed.”

Thumbs up on this one!

BOX THIS

Want to listen to a recording of my annual predictions radio show? Click on this link, ConferencePlus’s site to hear and see what JD and I said about these predictions during our show recorded Friday, January 20.