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Even with the slowdown impacting IT spending across the industry, the growth story of videoconferencing continued. It was primarily the government that fueled the demand for videoconferencing. Although there was a decent number of deployments in the private sector as well, it was the public sector that paradoxically ensured that VC had a better run because of the slowdown.

Videoconferencing grew by a healthy 49% in FY 09. Out of this, the endpoint market alone constituted Rs 156 crore while the infrastructure part made up the remaining Rs 35 crore. The endpoint market continued to grow at 50% as against Rs 103 crore in FY 08. The infrastructure market, although a small one in terms of its overall size, has been showing a steady growth over the years, thanks to the telcos who are eyeing this area rather seriously to gain deeper access into enterprise accounts. FY 09 saw the infrastructure market growing by around 40%.

Another reason for this growth in infrastructure can be the spurt in the demand of opex based models, that emerged as a part of tightened IT spending. This was a significant shift for conferencing, which has largely been capex based since its entry into the Indian market.

The endpoint market is dominated mostly by big names and group systems, and although almost every vendor is driving desktop conferencing, it grew by a meager 2% in FY 09. The room to room environment still dominates the market; the emergence of high definition conferencing is only giving it a further push.

Also, there is a crowd of free applications that still rule the scene when it comes to the desktop level. However, a positive sign on that front is that the security issues with free apps like Skype are fast gaining awareness, and there is a conscious effort, even among SMBs (the biggest users of open source) to secure their data.

Vendor Report Card
The vendor market share took some interesting turns during the year. Polycom continues with its dominance of several years, and in FY 09 too it captured a sizeable 53% of the total market share. And though its share dipped, it managed to stay on top with the help of timely upgrades and new names constantly cropping up on its clients list. It also did some serious reworking of its prices and touch points with its customers, and has made clear its new-found focus on the mid level enterprises. While banking on its strong brand recognition, Polycom, in the face of toughening competition also strengthened its chains with the channel partners. It is also driving high definition in a big way, and in fact deriving a substantial chunk of its growth from HD video conferencing.

What, however, bags the attention is the emergence of Aethra as the second largest vendor, with a share of 27% in the overall pie. What has worked for Aethra, and where others have apparently lost out, is its decided niche within the government. The last year saw the government adopting VC on a huge scale for SWAN and other major e-governance projects, and thats where Aethra managed to gain ground. It now has deployments over almost all nationalized banks, and has benefited from other government verticals such as NHAI, NIC, postal services, and defense. What seems to have clicked Aethra with the government is its well defined strategy of segment targeting and local technical support. Its strategic partnership with Radvision has also yielded results.

Although the visibility of deployments in the government vertical is low, the fact remains that the government has emerged as the largest buyer of VC and by that virtue has brought about some reshuffling in the market.

That makes TANDBERG the third largest player in the conferencing domain with a share of 11%. TANDBERG has been focusing on expanding its presence in the Indian market, and is strengthening its position by working with some key channel partners. However, its presence is mostly limited to large enterprises. And although it has lost some ground to Aethra, most of Aethras advances have eaten into Polycoms share.

LifeSize, the number four vendor in the market, though relatively new, has gained inroads into some big accounts in the industry. With its aggressive pricing of high definition conferencing, LifeSize is the market leader in HD segment.

While its apparent that Sony and VCON are losing their competitive edge to their rivals in spite of them ramping up their channel strategies, the competition is narrowing down between other vendors. TANDBERG and LifeSize are not too far from each other, and TANDBERG is moving aggressively up the ladder. Although some Chinese players are entering the market, as of now they havent made any significant dent. But they can be entities to look out for in the future.

Market Scenario
Conferencing reached yet more verticals in FY 09. While the government ensured that it invaded everything from the judiciary to prisons management, the other verticals that gained traction last year were education and healthcare. As the case of RoI is becoming clearer, conferencing is increasingly being adopted for intra-organizational functions as well.

One of the most significant buyers of conferencing solutions last year turned out to be mid level enterprises. Not being too affected by the slowdown because of their localized operations, they are striving for a globalized reach in a more cost-effective manner. They are, in fact, pioneering the adoption of technology to expand their operations.

Government, for the second consecutive year, has appeared at the helm of the conferencing market. During the last year, it purchased almost 43% of VC equipments sold in the market. It is readily implementing VC solutions in the SWAN networks apart from e-governance, judicial applications, postal networks, prisons systems, and now even education.

Corporate is the second largest adopter of VC solutions after the government. Although the deployments in IT/ITeS saw a mellowed response in the last year, the usage of VC increased significantly, primarily because of the need to crunch travel budgets. BFSI vertical chipped in a good chunk of sales in the corporate sector.

VC for education also kicked off in a big way through e-learning and distance education programs. Some premier institutes like IITs and IIMs in India have started offering their courses using VC solutions.

Developments in telemedicine have further pushed the intake of VC systems. Intake of HD systems in the healthcare sector is very high as high picture quality is required for live demonstrations and operations in hospitals. Hospitals in tier-2 cities are opting VC for seeking consultations from their expert counterparts.

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