A Banner Year for Conferencing and Collaboration

And What That Means for Service Providers

Hosted conferencing and collaboration looks like a good bet for service providers interested in climbing up the value chain in a move to grow new revenue at a time when companies are focused on maximizing worker efficiency and trimming travel budgets.

Even in the down economy, conferencing is seeing strong growth, says CEO Rick McConnell of Latitude Communications Inc., a voice conferencing equipment and services firm targeting large enterprises. “Web conferencing has gone from an experiment to a service worth $400 million to $500 million [worldwide], and growing at 40 [percent] to 50 percent per year,” he says. “The voice-conferencing market is worth about $2 billion, growing at 10 percent per year.” As Web conferencing becomes a mainstream tool, he adds, companies using it will become more interested in security, customization and application integration.

Latitude provides large businesses with conferencing equipment and related services to support rich media conferencing, including voice conferencing, Web conferencing, video conferencing and secure instant messaging. Latitude’s MeetingPlace customers include Agilent, Cap Gemini Ernst & Young, Hitachi Ltd., Lockheed Martin, and Avis. With MeetingPlace, meeting attendees can see, share and discuss information as if they were in the same room. McConnell says Latitude also provides a high level of security and application integration.

Companies using other conferencing services might use an AT&T, for example, for voice conferencing, he says. They might use WebEx or PlaceWare (which Microsoft Corp. recently purchased) for Web conferencing. Both services, he says, would run in a shared environment and the different services would not be integrated with one another. In contrast, Latitude offers a variety of conferencing services and dedicates servers to each enterprise customer, providing a higher level of security than is available in shared-server deployments, says McConnell, who adds large service providers eventually will have to offer both shared and dedicated server conferencing solutions.

Latitude, which usually sells direct to the enterprise but is open to using service provider channels, also offers highly customized solutions, McConnell says. For example, the company can integrate into Microsoft’s Outlook application, allowing users to more easily schedule meetings. Users can just click an icon on their desktops to trigger MeetingPlace to send out e-mail including all the information participants need to attend a conference. That information can be retained in the calendar item, so if the MeetingPlace conference date or time is moved, it updates all participants. “So from a user point of view, application integration is critical,” says McConnell.

Application integration also is a big part of the story at Apptix, which helps telcos and other service providers build hosted Microsoft applications businesses. Its customers include Digex Inc. and MCI, NTT/Verio and XO Communications.

Apptix provides its service provider customers with TECOS, a set of automation tools to handle OSS/BSS functions for hosted applications, explains Apptix CEO Alex Hawkinson. Apptix pre-integrates applications like Microsoft Exchange and SharePoint with TECOS.

“Service providers typically don’t have the skill set to handle the complexity applications require,” says Hawkinson. “We provide almost a wholesale managed service — with SLAs around managed services, sales and marketing, etc. — to hide complexity [from the service providers]. Service providers pay us per customer per month, so that decreases service provider risk because it is not human resources-intensive for them.” The service provider’s net margins for these services are higher than for traditional service provider services, he says, but service provider gross margins for this are lower. However, initial investment for the service is low — with no incremental costs associated with offering it. The Apptix services offer carrier resellers gross margins in the 50 percent to 70 percent range, he says, while net margins tend to fall to the bottom line.

Hawkinson says 2003 is a big year for conferencing and collaboration because this year Microsoft is announcing new versions of virtually all of its products. That includes Windows Server 2003 (in April), Windows SharePoint Services (in August), Exchange 2003 (in September) and Office 2003 (in October).

“Microsoft is really getting serious about this,” says Warren Baxley, vice president of product management at Voyant Technologies Inc., which sells audio conferencing ports, support services and a conferencing recording and playback service. “There’s going to be a huge go-to-market campaign this year around Microsoft Office.”

Microsoft Office is Microsoft’s major cash cow, notes Hawkinson. “Microsoft needs to think how to give companies something compelling to move up to Office 2003,” he says. “We believe the core new thing in Office 2003 is collaboration. It adds the ability of groups of people to collaborate on documents, meetings, etc.”

That, he says, could translate into new opportunities for service providers. “We think as a result, lots of customers will be looking at different deployment options that haven’t necessarily been available in past, some of which will require [enterprise] outsourcing to service providers.” Companies may not have the expertise to use all the new collaboration capabilities of the Office client, says Hawkinson, and often will want to collaborate with people outside their organizations or buildings. “So internal collaboration servers won’t make sense,” he says. “So that points toward end customers wanting the ability to quickly create online collaboration workspaces inside or among different companies.” Of course, that ties in nicely with the managed services push by large service providers like the RBOCs and traditional long-distance carriers.

In light of the new Microsoft releases, Apptix recently launched an on-demand service over the Net for Microsoft’s Windows SharePoint Services. Using Apptix’s hosted solution, customers, service providers and resellers can access Windows SharePoint Services, a next-generation solution for Web-based file sharing and team collaboration. Apptix also has a hosted service related to Exchange 2003; Microsoft is driving demand for the hosted version of Exchange 2003 from its site and through a trial program. As of late July, Apptix had signed about 10,000 companies for the hosted Exchange 2003 trial.

“One of the key areas we see taking off is hosted messaging and collaboration,” says Ignacio Davila, product manager for the hosted Exchange solution at Microsoft. “If you are a broadband service provider, one way to add value is to bundle e-mail boxes with your broadband and improve end user productivity through shared calendaring and doing synchronization with mobile devices. This is a play where we see lots of value for our end customers and service providers.”

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