Thanks to the recessionary trends in recent times, business traveling is gradually on the decline for most corporates in India. And with videoconferencing obliterating distance, they have a smart option today.Therefore, no wonder that in 2008, India was the fourth largest market for videoconferencing in the APAC region. This year, it is expected to surpass Australia and gain the third slot. Growing at a CAGR of 20%, it is expected that India will become the fastest growing market in this part of the world.

The videoconferencing market in India touched Rs 128 crore in FY 2008, up 16% from a revenue of Rs 110 crore the previous year. At Rs 103 crore, endpoints accounted for 80% of this market, a growth of 14% against a revenue of Rs 90 crore the year before. Though a small market in absolute terms, the infrastructure equipment revenue grew faster at 25%, and touched Rs 25 crore in FY 08, up from Rs 20 crore in FY 07.

Videoconferencing is riding the growth curve sitting on the wings of the government and corporate sectors. The government infact, is at the helm of this videoconferencing invasion as it alone bought around 40% of the total videoconferencing endpoint equipment in the year 2008. However, more verticals like health-care and education are hopping on the the videoconferencing bandwagon and are expected to propel its demand further.

The Vendors
Polycom continued to lead the conferencing segment with a share of 51.5% of the total market share. Aethra, though very far from Polycom, gained the second slot with a market share of 26.5% in the year 2008. Tandberg emerged third in the race with a share of 11.6% (Frost & Sullivan report).

The share highlights the unevenness prevailing in the Indian conferencing market. The landscape is far from a level-playing field, with the market highly skewed towards a single vendor. Polycom has maintained its dominance over the years, and this year too accounted for a major chunk of the market with over 50% share. However, its a close call when it comes to the remaining half of the market as competition intensifies among remaining vendors. Polycoms nearest competitor, Aethra is way behind but the gap seems to narrow down as we go further down the ladder.

The videoconferencing market is highly skewed towards a single vendor, Polycom, but Tandberg and LifeSize are aggressively moving up the ladder

While its apparent that Sony and VCON are loosing 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 a significant dent. But they can be entities to look out for in the future.

Polycom 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.

Polycom is also driving High-Definition in a big way and is infact deriving a substantial chunk of its growth from HD videoconferencing.

Aethra, of late has been enjoying sturdy year-on-year market gains. It is also making inroads into potential verticals like healthcare and education and is focusing on increasing its presence in the SME and corporate sector.

Tandberg is also continuously scaling up the ladder and is increasing its presence in the traditional videoconferencing domain as against championing the high-end cause alone. It is strengthening its stronghold by working with key channel partners.

LifeSize, with its aggressive pricing and promotion of HD has emerged as a fourth player in the conferencing landscape. It is infact driving the HD cause.

The Way it is
The availability of bandwidth and its gradual affordability has supplemented the growth of videoconferencing. Customers are gradually shifting from ISDN to IP network, which means more availability of the bandwidth. This spells higher quality video calls at a lower cost. Therefore, the performance glitch, which seems to have been plaguing the Indian market till now, is finally coming to an end. This is good news, both for the customer as well as the industry.

Higher bandwidth is also driving high definition conferencing. As per a Frost & Sullivan report, the adoption of pure IP-based endpoints to dual mode enabled endpoints has grown from a ratio of 10:90 to 40:60 over the years and is growing rapidly. HD systems have further fuelled the growth of videoconferencing systems on the whole, but on the contrary, are witnessing a slow adoption rate due to their high bandwidth requirements and high cost of deployment. The adoption of HD to SD (standard definition) systems is at the ratio of 30:70 and this trend is slowly picking up.

The adoption of videoconferencing percolated to newer verticals in the last year. While the government continued to move up the adoption scale, other sectors like the judiciary, distance learning education and the e-governance projects and functionaries like the post offices, hopped on to the conferencing ride.

Within large enterprises, expansion of videoconferencing is happening as an intra-company communication tool in offices in India and just a pipe to sites outside the country. After this, the next phase will be the adoption of technology for intra-campus and intra-office communication. Another trend is the percolation to mid-market companies, as it allows them to globalize in a more cost effective manner.

Also, the videoconferencing endpoints market witnessed stronger sales of group systems in 2008. Majority of the videoconferencing endpoints sold were executive systems. This shows that the top management of organization is increasingly preferring boardrooms over flight passages. Demand for desktop videoconferencing is also steadily gaining momentum as web conferencing is more common for desktop users. Software-based videoconferencing solutions are available in the market which can be either downloaded or are available free of cost for one-to-one conferencing is preferred by SOHOs.

At your Service
Although we are still in the nascent stages, the adoption rate, both internal and external, is encouraging. In the year 2008, the videoconferencing equipment market witnessed a growth of 23% in its revenue, a figure that supports the industrys claim of promoting videoconferencing within the organizations. Many companies now completely rely on videoconferencing for their interaction with their regional offices. Mridul Srivastava, marketing head, BT India says, The innovative character of videoconferencing has enhanced our internal, especially cross-border communications and shortened the distance between the countries. Furthermore, it helps us save costs and will now allow us to include our external business partners in our videoconferences.

The range of videoconferencing solutions, since the time of their debut in the Indian markets, have also expanded. From being exorbitantly priced and aimed at only the high-end users, the vendors are now eyeing the potential of medium- sized businesses seriously.

Dinesh Sehgal, regional director, Tandberg (India, Srilanka and Bangladesh) agrees to the price-segmentation finally happening in the videoconferencing segment. According to him, The price varies widely depending on the scale of the solution deployed. He also asserts the fact that unlike the initial stages in videoconferencing, which were only for the large enterprises, there is now a broad range of video solutions from the highest-end Telepresence products to video for the meeting rooms, executive desks, work desks, and PC, and a range of network infrastructure products.

And even as we wither in the face of a global meltdown, it doesnt spell bad news for videoconferencing, for most organizations adopt it with a view of cutting travel costs and that figures high on the agenda of almost every company these days.

No wonder the estimates are encouraging. Frost & Sullivan estimates a CAGR of 23.9% for videoconferencing during the years spanning 2008-15. The market, as per the report, is expected to grow at of 22.4% in the year 2009 and touch the figure of $36 mn.

Mehak Chawla
mehakc@cybermedia.co.in