Editorial
 
  January 21, 2013 • Volume 33, Number 3
Copyright 2013 by TeleSpan Publishing Corp. All rights reserved.

“I can see for miles and miles”*


TeleSpan’s 2013 Predictions


Here’s what I think!

This year, 2013, is TeleSpan’s 33rd year being published and our 18th annual predictions edition!

OMG!

I can’t believe how accurate I’ve been since I started this. Done 170 predictions and been right 127 times for a batting average of 75%. Maybe I really am “The Crystal Bald”!

As always, before I deliver this year’s predictions I want you to remember that 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. That said, I’ve got to be honest with the readers of Electronic TeleSpan, and unfortunately, some companies, some initiatives will fail. But, and you know my big but, we as an industry are really, really doing well, doing soooooooooooooooo much better than we did when we started over 30 years ago.

Okay, if you’re ready, here are my predictions for this year.

2013 PREDICTIONS

 

TeleSpan’s Prediction #1:

Polycom goes private and/or is bought

You will recall no doubt that I suggested in November last year that this might happen. It was when Polycom filed an 8-K with the Securities and Exchange Commission (SEC). As I explained in the November 19, 2012 edition of ET, the 8-K Polycom filed allowed Polycom to change its corporate bylaws so that “…vacancies in the Board of Directors may be filled by a majority of the remaining directors, even if less than a quorum, or by a sole remaining director;…”

I ran the 8-K by my attorney who said, “My wild guess is that there is turmoil and possibly an unfriendly takeover in process.”

That said, I’m predicting that Polycom is going to go private sometime in the next year or be bought. I’ve speculated that IBM () could be the buyer.

Why IBM?

Well it’s pure speculation, but IBM has a history of snapping up collaboration companies and trying to re-invent them. Further, IBM has had deals with Polycom in the past. You might remember Polycom and IBM jointly announced some living room video plans at the 2010 Consumer Electronics Show (CES).

Can IBM afford Polycom? Well, last week Polycom’s value, really its “market cap,” was $2.028 billion. As of last week, IBM had a market cap of $217.5 billion but more importantly IBM had $12.3 Billion in cash. Soooooooooooo, if IBM wanted ’em, it could buy ’em!

For an earlier story on Polycom’s 8-K, see Electronic TeleSpan, November 19, 2012, pp. 5-7.

For an earlier story on the IBM Polycom deal at CES in 2010, see Electronic TeleSpan, January 10, 2010, pp. 4-5.

 

TeleSpan’s Prediction #2:

Sales of software-based group videoconferencing systems pass hardware-based group systems; Polycom falls behind Vidyo

This one is so obvious!

Look, remember last year I said, “Strike 3,” reporting that Polycom, Tandberg and Sony all reported drops in their group videoconferencing hardware sales during the third quarter. The drop was 11%.

What you may not remember, though, is that sales also fell 10% during the preceding quarter, the second quarter last year. The net? Sales of hardware-based group videoconferencing systems were really down last year.

Then there were the flat (actually, falling) unit sales of Cisco’s quarter-million-dollar TelePresence hardware units, but why bother even counting them.

More important is that, just as I was reporting that Polycom, Tandberg and Sony’s sales were falling, I learned that Vidyo’s revenues from its software-based group videoconferencing systems sales were zooming, growing year-over-year by 80% in 2011 and then 90% during the first quarter of 2012. Yeah, Vidyo’s revenues are much lower than TeleSpan’s Big Six group hardware sales revenues, but the trend is clear.

Smart folks out there are saying, “Why should we buy dedicated videoconferencing hardware when we can buy videoconferencing as software and run it on our [you fill in the blank]…”

For my “Strike three” third-quarter Big Six story, see the November 19, 2012 edition of ET, pp. 1-3. For the story on the Big Six second quarter 10% drop, see the September 2, 2012 edition of ET, pp. 1-3.

 

TeleSpan’s Prediction #3:

Business callers use WebRTC video endpoints for 25% of calls by 2016

Cliff Notes: WebRTC is software that allows you to launch voice, video, and data conferencing from anything that runs a Web browser.

Since you read Electronic TeleSpan, you already know it’s not just me who’s calling WebRTC as a “game changer.” It’s virtually every vendor in our industry who’s calling it that as they begin looking at WebRTC as the potential new launching pad for all their collaboration products.

Yes, WebRTC runs today only on Google’s Chrome browser, but as I said in December, WebRTC is about to run on Mozilla’s Firefox, and it’s rumored that Apple will give in [as it did with Google Maps], and will support WebRTC on Apple’s Safari browser. Chrome, Firefox and Safari isn’t much of a market, you think? Well, as of November 2012, those three browsers owned over 53% of the desktops around the world.

Why do I think that our industry’s users of business videoconferencing will use WebRTC for 25% of their calls?

Well, it turns out some vendors in our industry are reporting that the video calls they network are already heavily coming in from endpoints using Web browsers. You may recall when I covered the WebRTC conference in the December 3, 2012 edition of ET, I reported that Oded Gal, Vice President of Product Management for BlueJeans Network, told the audience that 35% of the BlueJeans video connections used a browser to connect to the BlueJeans video bridge.

Maybe I should predict that 35% instead of 25% of video endpoints will be using WebRTC for their calls by 2016!

We’ll be covering WebRTC in depth at TeleSpan’s 18th Annual Future of Conferencing Workshop in Las Vegas March 7 and 8, so you won’t want to miss it.

For my full coverage of Web RTC as the “game changer,” see the December 3, 2012 edition of Electronic TeleSpan, pp. 1-8.

 

 TeleSpan’s Prediction #4:

Teens grow up and bring video chat into the office/workplace, using "apps" vs. group endpoint equipment for business calls

Remember when we didn’t use text chat? Then our teenagers brought their pagers, then their cell phones into the kitchen, not talking but texting. It was like Jeremy in Zits. Soon, all of us were using text messaging.

Well, turn the clock to 2012 and Pew Research now reports that 40% of teens, 12–17, are using video chat over Skype, Google Talk and Apple iChat. I wrote it up in the May 21, 2012 edition of Electronic TeleSpan (page 4).

Them teens are going to come into our work force after getting degrees, and are going to collaborate in groups and change the way we do business. When they do, they’re going to look at our aging legacy group videoconferencing endpoints and say “You kidding? I can do that on my 1) iPad, 2) iPhone, 3) Android phone, 4) Android tablet….”

Nuf said!

 

TeleSpan’s Prediction #5:

Mobile & VoIP endpoints =70% of all voice conference calls endpoints by 2015

Let me just ask you this: When was the last time all of your team members were sitting in front of an office phone when they joined you on a conference call? This is 2013, folks, not 1913. Folks are calling into conference calls using mobile or VoIP endpoints.

I don’t know about you, but all of my team members, when they call into our Future of Conferencing Workshop planning calls, are on mobile devices because they’re in-between other calls and meetings they’ve got on their calendar. And most often, they’re in transit. If they’re out of the country, they use their VoIP phones to save on the cost of the call.

I’ll bet we’re already well beyond 40% of conference call endpoints using mobile or VoIP today and I’m betting we’ll reach 70% by 2015.

 

TeleSpan’s Prediction #6:

iPad & and other tablet-based video systems surpass traditional manufactured executive endpoint video usage by 2015

Okay, in a good quarter, we sell maybe tens of thousands of executive video endpoints. That’s less than a drop in the iBucket when it comes to tablets. As of October 2012 Apple had already sold 100 million iPads since it introduced them in 2010 and forecasters were predicting that as many as 112 million tablets would sell in 2012. (Source: October 24, 2012 edition of The Wall Street Journal)

Now remember that tablets all come today with front- and back-facing cameras, as well as video chat/videoconferencing software.

You think that adults won’t use tablets for videoconferencing and will want to be “execs” and use executive videoconferencing systems?

Well, re-read my Prediction 4 above, where I predicted “Teens grow up and bring video chat into the office/workplace, using ‘apps’ vs. group endpoint equipment for business calls.”

I should have mentioned in my text for that prediction that babies, little kids, are already heavy users of tablets. In fact, according to Common Sense Media already 39% of children 2-4 years old and 52% of children 5 -8 years old have used an iPad or iPhone. The data were published in the May 22, 2012 edition of The Wall Street Journa.

I know, you’re about to ask: “What are adult business people going to use today?” Well, they not only use videoconferencing today, but they travel as well, as in flying. Maybe you missed it, but The Wall Street Journal on September 27, 2012 reported that American Airlines, Quantas, Delta, and Air France, are going to begin to loan out tablets, mainly Apple iPads, to passengers to use on their long flights. And airlines are of course adding Wi-Fi on the planes.

I’m convinced that toddling babies, playing kids, and traveling adults are going to be using tablets for videoconferencing. Soon, as in by 2015, use of tablets for videoconferencing will pass the use of “executive” desktop systems.

.

TeleSpan’s Prediction #7:

Freeconference calls have peaked as a percent of North American conference calls and will enter “free fall” with the loss of rural phone revenue-sharing

This one is a hard one for me, as I’ve been tracking and reporting the growth of free conference call services for the past several years. But facts are facts. The FCC rules have changed and while free conference call services used to be able to profit from revenue sharing, in particular from calls terminated at rural phone companies, that revenue sharing is about to end. With that change coming, which we will report on at the Future of Conferencing Workshop in March, the leaders in the free space are hurtin’. While the “free” folks grew their share of call minutes from under 8% of the total North American conference call minutes, to about 12% at the end of 2011, their share began to fall during the past year. The heck with their minutes, their revenues (from revenue sharing) are about to become either zip or nada. With that, they have zip or nada reason to remain in business.

That said, at least one of the larger “free” providers IS busy creating new offerings that will generate revenues in North America, as well as teaming with phone companies outside of North America where revenue sharing is still, shall we say, “kosher.”

Bottom line: The profitable days of offering “free” calls in North America are coming to an end.

 

TeleSpan’s Prediction #8:

SMART Technologies wins against class action suit

I will start this one off saying that I don’t know anything more than what is public about this suit.

The “suit,” as you may remember, is a shareholder class action suit against SMART Technologies and hence against its management. The suit, which became public in February 2011, has to do with the real value of SMART when it went public in July 2010, when SMART raised nearly $660 million dollars. On SMART’s first day of public trading, its stock was trading at about $16.00 a share. Over the next several quarters, SMART reported results that, shall we say, shareholders heard with less than pleasure. By February 2011, SMART’s stock had fallen from $16.00 a share to about $6.00 a share. As SMART’s management team reported the company’s quarterly results in February, they as well announced a “pending class action law suit” against SMART.

Over the past 24 months, SMART’s stock has fallen to about $2.00 a share, or about 87% since SMART went public.

I know the founders, the management team at SMART, have known them for decades. They have a history of philanthropic donations, and considering their employees as “family.” During an interview I had once with Dave Martin and Nancy Knowlton, the husband and wife team who founded and run SMART, I was told, “We have no children… our employees are our family.”

I just can’t believe that Dave and Nancy would have knowingly done anything to devalue the shares of SMART that their “family members” own.

My take?

Dave and Nancy will be proven to be not guilty and the class action lawsuit will fail.

For a story on SMART’s announcement of the IPO, see Electronic TeleSpan, June 28, 2010, pp. 1-2.

For a story on SMART’s successful IPO, see Electronic TeleSpan, July 29, 2010, p. 3.

For a story on the class action suit, see Electronic TeleSpan, February 14, 2011, pp. 1-2.

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TeleSpan’s Prediction #9:

Call recording & indexing becomes the most popular feature of conference calls by 2016, adding value to calls & revenues to CSPs

For more than the past decade I’ve been reporting the erosion of the price per minute of voice conference calls, forcing in many cases an erosion of profits. As my team member Judy Sterling says “Prices are in free fall!” Seeing this, we at TeleSpan have been hosting TeleSpan’s Future of Conferencing Workshop for the past eight years, bringing the existing conference service providers (CSPs) together with those outside of our industry who have novel ideas for boosting profits by adding value.

While preparing for this year’s Workshop, I ran into several folks who agree with us, and have come up with ways of doing this, adding value and profits to conferencing calls, using call recording and meeting indexing. You might recall my interviews with Harqen in October and then my coverage of “hypervoice” at the Web RTC conference in December last year. I’m convinced that the existing as well as the new CSPs will see these as valuable and profitable add-ons, and will use them to turn our voice conference call market around by 2016.

Be sure to come to our Eighth Annual Future of Conferencing Workshop, March 7-8 in Las Vegas, as we’re going to have a panel on this very topic.

For earlier stories on Harqen and hypervoice, see Electronic TeleSpan, October 22, 2012, pp. 1-2 and December 3, 2012, p. 2.

 

TeleSpan’s Prediction #10:

Group videoconferencing hardware sales fall below 25,000 a quarter by 2015

After TeleSpan’s Big Six peaked during the second half of 2011 at about 50,000 group video unit sales per quarter, which drove our estimate of total group unit sales to over 57,000 a quarter, sales began to fall steadily during 2012. For the first three quarters of 2012, sales per quarter fell to under 44,000 for the Big Six and under 50,000 a quarter for our estimate of total global sales.

Why did unit sales fall?

Because it became easier and less expensive for users to get the same value they’d gotten from the dedicated group videoconferencing systems, from systems based on software running on the very PCs they already have in their offices, and from the laptops and tablets they were taking into conference rooms.

As I said in my prediction #2 above, while the Polycoms of the world were reporting decreased sales each quarter last year, revenues for Vidyo, which sells software-based videoconferencing, grew 80% in 2011 and 90% during the first quarter of 2012.

Folks, just accept it—dedicated hardware-based videoconferencing is a thing of the past. It won’t die, but will lose weight, with sales falling from the unit sales of 50,000+ per quarter to under 25,000 a quarter by 2015. Then it will really tumble.

 

 

2011 PREDICTIONS

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

TeleSpan’s Prediction #1

Skype video calls surpass hardware-based video calls by 2014

All I can say is: “Just do the math!”

While I don’t yet have the 2012 numbers, Skype reported more than 300 billion minutes of Skype-to-Skype and Skype-out calls in 2011, 50% of which were video calls! TeleSpan’s survey of voice conference calls, on the other hand, showed that globally there were 70 billion minutes of business conference calls in 2012. Video call minutes from hardware-based endpoints through service providers were way less. TeleSpan puts them at 20 billion minutes, to be nice.

If you take Skype’s calls, 300 billion, half of which were video, that’s 150 billion video minutes or more, as video calls tend to be longer than audio calls.

The last time I checked, 150 billion video minutes is larger than our 20 billion video minutes.

Soooooooooooo, I’ll take a thumbs up on this one.

For the story on Skype’s traffic, see Electronic TeleSpan, January 16, 2012, pp. 2-3.

 

TeleSpan’s Prediction #2:

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

It’s not happened yet, but then I have another year on this one, as I said “in two years.”

Let’s see what happens by 2014.

 

TeleSpan’s Prediction #3:

Cisco or Polycom buys Vidyo.

Oh well, can’t be right every time.

That said, with Vidyo growing so quickly, I continue to think someone will buy ’em!

 

TeleSpan’s Prediction #4:

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

Got this one wrong.

American Capital which owns Global Conference Partners, a.k.a. Freeconference.com, did not sell Freeconference.com last year.

 

TeleSpan’s Prediction #5:

Collaboration grows as part of Social Networking.

I kind of snuck that one in, as Facebook had already signed an agreement with Skype to bring video chat to Facebook users. But further, if you go online to any social networking service, LinkedIn and more, they all now offer some sort of social networking.

Soooooooooooo, I’ll take a thumbs-up on this one.

 

TeleSpan’s Prediction #6:

Arkadin becomes one of the top 5 CSPs in audio.

All I can say is that based on the data TeleSpan collects on conference calls, which we have collected since 1986, Arkadin did become one of the Top 6 at the end of 2012, joining InterCall, Premiere-PGi, AT&T, Verizon, and Global Crossing. Nothing will stop Arkadin from passing one of those five, putting it IN the top 5 CSPs in audio. As such, I’m taking a thumbs-up on this one, too.

 

TeleSpan’s Prediction #7:

Logitech goes deep into the living room.

Maybe you didn’t see it in August, but Logitech at that time announced the TV Cam HD, expanding its entrance into living rooms. The $199 camera turns your living room TV into a videoconferencing system. There’s a video on it on YouTube if you didn’t see it.

“Pat, pat, pat”, the sound of me patting myself on the back for getting yet another thumbs-up.

 

TeleSpan’s Prediction #8:

Polycom enters “consumer” videoconferencing space, but falls!

Yes, Polycom did announce a tsunami of new products that will be coming out this year and next, some of which were for the consumer market. But I’ve not yet seen the company really “enter” that space and “fall,” so I’ll take a sideways on this one.

That said, J D Vaughn said on our Annual Predictions call, “Elliot! They’ve already failed on this one, so take it as a ‘thumbs-up’ on it!”

Gee, if JD said it’s so…..

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TeleSpan’s Prediction #9:

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

PGi and InterCall did indeed bundle video with their voice offering via UC offerings. But unfortunately TeleSpan doesn’t have the data to show if it was picked up by business, so we have to take a sideways on it.

 

TeleSpan’s Prediction #10:

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

This was JD Vaughn’s prediction, and as I said above, both PGi and InterCall did introduce such services last year so he was correct.

Dang! I’M THE CRYSTAL BALD and HE’S ONLY “MR. KNOW IT ALL!”

 


 

Want to listen to a recording of my annual predictions radio show? Click on this link, to download what JD and I said about these predictions during our show recorded Friday, January 18.

Special thanks to Arkadin

Special thanks to Arkadin, which hosted TeleSpan’s 18th Annual Predictions event on Friday, January 18th. The event was archived and will be available soon, so check our Website or check ET next week where we’ll have the link to the archive for you to listen to and see.

 

 

* ”I Can See for Miles,” a #9 hit for The Who, on October 14, 1967, according to Joel Whitburn’s Top
Pop Singles 1955–1996. Words and music by Peter Townshend; copyright 1996 Fabulous Music Ltd.

 

Elliot has retired – it’s true!