Video Ready for Prime Time Business Communications

June 10, 2008

Cisco Systems has a problem. But for Marthin De Beer, leader of the company's Emerging Technologies group, it's a good one to have. Cisco TelePresence, the new "as if you are there" video meeting technology, is so popular at the company that it is difficult for employees to book time in one of the networking giant's hundreds of virtual conference rooms throughout the world. But for De Beer and Cisco, that just goes with the territory when you're pioneering a new way to communicate.

"This is just the beginning," De Beer says, asserting that Internet protocol (IP) video has the potential to change business operations more dramatically than any other Internet technology to date. With this in mind, Cisco is now focused on developing many more new video communications systems and tools for businesses of all shapes and sizes.

De Beer has seen this sort of thing before. He played a key role in bringing voice communications to the Internet with Cisco's line of office phone systems. These now dominate the industry and have opened the door to what the industry calls "unified communications": the combination of voice, email, text messaging, and now even video on one IP-based network.

News@Cisco spoke with De Beer about the rapid development of video as a viable business communications option and its implications for companies from the largest global corporations to the one-person home office.

Why is video such an important way for businesses to communicate?

Marthin De Beer: Very simply, video enables the most natural form of communications. The visual senses are incredibly important. Imagine going through life blindfolded. That's sort of how email and the phone are. Certainly, these are amazing tools and revolutionary in their own ways for helping us work together over distances. But now it is time to make modern communications even better. Studies show that visual clues-such as the raise of an eyebrow or a slump of the shoulders-comprise roughly 60 percent of the information conveyed in a conversation. Such nuanced communication can only happen in face-to-face meetings. To do that over distances, you need high-quality video.

Also, Internet-based video communications is coming not a moment too soon to address two daunting issues facing businesses. The globalization of business is increasing the importance of digital communications. While "disembodied" communications, such as the telephone and email, help, they still lack that vital personal connection people experience when face-to-face. Video, for the first time, is now able to effectively provide that crucial human experience. So video can help cost-effectively tie together the increasingly far-flung operations of today's companies.

And more broadly, businesses and the world in general face some serious issues regarding travel. Fuel prices have quickly become a much bigger part of corporate budgets, while pollution from travel with both planes and automobiles is a major contributor to climate change. Video now offers another way. While there is no substitute for a handshake, such video technologies as Cisco TelePresence can greatly reduce the need for a significant portion of a business' travel activities. That cannot only save a company a lot of money, but, we hope, it can also help save the planet.

Why is video now ready to become an effective business communications tool?

Marthin De Beer: The clear pattern with Internet technologies is to look to consumer behavior as the harbinger of the future of business communications. We saw this, for example, with cell phone usage and Wi-Fi adoption. Employees were using these technologies in their personal lives, and, quite logically, they wanted those same capabilities in the workplace. Now we are seeing a clear message on video usage. The number of videos viewed on public Web sites has increased roughly 60 percent in the last year. And in January the Internet video site YouTube had 258 million visitors who watched 250 billion minutes of video. That's a lot of video. Now, virtually every major news and information site has video options. Mostly, the video from these sites is pretty darn good. The days of pixel vision are over. People are making this clear by voting with their mouse clicks. Video over Internet-based networks is now more than good enough.

Some business executives might be a little leery about committing to video as a means of communications. Businesses, after all, are much more demanding than most consumers, and, certainly, the ramifications of possible problems are much greater for a corporation. What would you say to these types of skeptics?

Marthin De Beer: Certainly, some companies have been burned by video in the past. Video conferencing systems and other previous kinds of video communications really didn't replicate that face-to-face experience. The quality wasn't there, plus these products were rife with complications as well as being expensive. Video conferencing was a $1 billion market, but customers of these systems used the products less than 6 percent of the time. That's not a very good return on an investment.

The problem was that video communications needs to be as easy to use as the phone or email. And the quality has to be "good enough"-the senses have to receive clear information. When you talk on a home or office phone, for example, the person on the other end will dependably be just as easy to hear as if you were speaking in person. Now, thanks to basic networking improvements in bandwidth and quality control, coupled with such advances as high-definition formats, video is now good enough to satisfy the senses. So that's an important inflection point. No longer do people have to fight the technology. It is now doing what it needs to do to make video communications nearly as effective as in-person meetings. Our senses our telling us, "Okay, this I can understand."

But providing quality video images is only half the battle. The next question is what to do with this video. That's where Cisco is really focused. While we have and continue to make what we believe is the best networking gear in the world, we are also extremely focused on building complete video communications systems. There are many, many ways to use video in business, but each different application of video requires its own set of tools, interfaces, supporting technologies, and other characteristics that make them really work well for the task at hand. Cisco TelePresence is a great example of this. Most of that product is based on technologies that are also available to other vendors. But by pioneering a few key components and then very thoughtfully combining everything together-such as focusing on ease of use and dependability-we came up with a uniquely effective tool for conducting virtual meetings. With these video communications systems such as TelePresence, the devil is indeed in the details. You have to think through the specific business need very carefully, and then build the system that best addresses that need.

What are some of the specific ways Cisco is improving video as a business tool?

Marthin De Beer: Our basic approach to video is two fold. First, we are focused on creating the technologies and products necessary for building top-notch networks that can provide the bandwidth and quality control necessary for flawlessly managing video traffic. Without this foundation, IP-based video simply would not be possible. We've been working on this task for quite a while. Eight years ago or so, people really did laugh when we told them we were building the CRS-1, our flagship core router for major telecommunications networks. They said we would only sell about 10 of them because it was so powerful. But our CEO John Chambers has always said that we didn't build the CRS-1 for data or voice traffic. We built it for video. And now, as people can see, video needs all the bandwidth it can get. We've also built such industry leading routers as the recently announced Cisco ASR 1000, which is driven by one of the most sophisticated microprocessors in the world and offers an unprecedented ability to support an array of sophisticated traffic management services while maintaining lightening fast bandwidth. And our Linksys home networking division continues to create industry-leading small business and consumer networking products that more and more focus on supporting video communications in the home.

Secondly, as mentioned, we are building specific communications systems that take best advantage of the network's new ability to carry video traffic. In the past, we might have just said, "Here's a router, some switches, a security devices and a few other things. Enjoy building your network." But as the industry and Cisco have matured, the need to connect the dots, so to speak, is much more important. Video can be challenging, and there's a lot for our customers to sort out. To this end, we are focused on building easy-to-use systems suitable for a wide-range of businesses and communications tasks. We are really at the beginning of these efforts.

And today, we are announcing our latest steps for improving business video communications. We have a major new release of our Digital Media System for supporting on-demand video, live TV broadcasts, and digital signage. Also, we've built a new Cisco ISR branch office router that natively supports our IP-based video surveillance system. In addition, we are announcing a new consultative service called the Media Ready Network program. Through this service we offer our customers architectural guidance, best practices advice, and other assistance for preparing their networks for business video communications.

While few would argue the potential of video for improving business communications, using video over business networks can require significant investments. What is your advice to CIOs and other executives who face difficult budgetary restrictions, especially considering the current economic conditions?

Marthin De Beer: Challenging times often force companies to do things differently. And business video is a great example of how a smart investment can lead to significant savings. Our customers have seen very rapid payback in our video systems. Return-on-investment has been 12 to 18 months in many cases. And, as mentioned, video communications can help companies chop a big chunk out of their travel budget, now a major concern for most all businesses. But beyond bottom-line savings, video communications simply help companies work better; more effectively connecting employees to customers, partners, and other employees.

The beauty of investing in IP networks is their flexibility. You are not investing in just one technology or a single video system. You are investing in a capability. For example, our customers are finding out that our IP-based video surveillance systems are not just excellent at security, but they can also be used for marketing. The video from surveillance can be re-purposed by a retailer to understand shoppers' behaviors or reactions to particular promotions or displays. Also, our Digital Media System products can be used for digital signage for advertising, to provide employee training, conduct company meetings, and "broadcast" virtually any type of video to the desktop. This type of flexibility allows companies to double-up on their investments in video networking technologies, helping accelerate their returns-on-investment.

Also, video is no longer just a high-end communications option. Cisco offers an increasingly wide range of products suitable for the world's largest corporations to the one-person home office. Products from our Linksys line and WebEx business collaboration tools provide very inexpensive options for home office and small businesses to use video communications. We have a nice array of unified communications tools that integrate well with any Cisco office phone system, and our Digital Media System comes in a variety of shapes and sizes suited for almost any company. Earlier this year, we announced a personal TelePresence product, which costs about $20,000 and is perfect for the executive office. That price is a dramatic drop from our initial TelePresence systems that were designed for larger corporations and multi-person meetings. The pricing on video technology will continue to drop rapidly. In fact, I'm comfortable in saying that in the near future we expect to have a Cisco TelePresence product for the home.

What is the importance of video to Cisco's business and its bottom line?

Marthin De Beer: Well, video really is our business these days. It is the "killer app" for business communications. Certainly, data and voice require equal innovation and expertise, but video is at the top of the network food chain. Currently, it represents a $50 billion market opportunity for Cisco.

Video is by far the most demanding and complex type of network traffic. We figure it is about 10-fold more complex than voice. And as people are seeing, video eats up bandwidth. For example, one hour's worth of a TelePresence meeting is equivalent to a year's worth of email.

While video will definitely put some pressure on corporate networks and the greater Internet, we see this as the perfect challenge for Cisco. Video gives everyone a really, really good reason to invest in improving their networks. That means strong sales and strong demand for Cisco's networking "plumbing" products: routers, switches, security devices, and other technologies for making the network as fast and as smart as possible.

But beyond basic network equipment, video is also opening up major new lines of business for Cisco. Many of the company's new video communications systems are coming out of the Emerging Technologies group. Cisco TelePresence is the most famous example. But we are also having great success with our IP-based digital media and video surveillance product lines. Both of these are showing excellent growth. Half of the world's largest banks, for example, are deploying digital signage systems. And the IP-based surveillance market is expected to grow 30 percent per year for the next several years as it rapidly replaces old, proprietary analog-based systems. We've seen this type of transition before with data and voice communications. Now it is video's turn.