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Watch Out Cisco, Here Comes Telanetix

A fledgling startup is putting virtual meetings in conference rooms across America for as little as $1,000 per month.

Cindy Waxer on May 15, 2007

It’s not often that a feisty upstart attempts to go head-to-head with industry behemoths such as Cisco Systems and Hewlett-Packard, but Telanetix is doing just that. Putting a hi-tech spin on the battle of David vs. Goliath, the fledgling telepresence provider is single-handedly generating buzz, landing large contracts and putting pressure on competitors to slash their prices. Such efforts appear to be paying off. Equity research firm Dutton Associates estimates that Telanetix’s revenues will grow from approximately $13 million this year to $25 million in 2008.

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If there’s an ace up Telanetix’s sleeve, it’s bargain-basement pricing. In March, the San Diego-based company announced that its Executive Digital Presence system is now available on a $1,000 per month financing plan ?a fraction of the minimal quarter-of-a-million dollar investment required by telepresence providers such as Cisco Systems and Hewlett-Packard.

No wonder companies are paying attention. Says Jayanth Angl, an Info-Tech Research Group analyst: “Being able to outfit a room for $1,000 a month with no upfront investment is quite attractive.?Not to mention the opportunity such pricing creates for Telanetix to broaden telepresence’s target audience from Fortune 100s to the middle market.

Attractive Pricing

But how is a young outfit able to offer a fully featured telepresence solution at a much lower rate? One of the factors contributing to this price point is Executive Digital Presence system’s minimal reliance on proprietary components, adherence to industry standards and use of third-party networks for connectivity. By integrating with legacy videoconferencing equipment, Telanetix’s solution reduces companies?capital and labor costs.

Says Angl: “If you have existing investments in videoconferencing equipment and you’re able to retain that, it’s a benefit compared to Cisco’s system which is very much a proprietary solution.?br>
And then there’s the issue of scalability. While many telepresence vendors are focused on transforming conference rooms into high-impact, virtual meeting environments, Telanetix takes a modular approach with a solution that can easily fit into an existing room.

“With Cisco and with HP as well, there are very strict room requirements so the solution actually includes the furniture, lighting, audio and video equipment,?says Angl. “The intention is to ensure an optimal meeting experience but what we’ve seen is that it actually limits some opportunities for deployment within different enterprises.? Big-Name Clients.

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So far, Telanetix’s approach has proved effective. In January, the company beat their competition to a major contract from Mercedes-Benz USA, which plans to use the system to link field offices throughout the United States with the main campus located in Montvale, New Jersey.

But Cisco isn’t breaking a sweat just yet. “There’s very little magic in the world so you tend to get what you pay for,?warns David Hsieh, director of marketing for the Cisco TelePresence System. Hsieh says a telepresence system worth its weight should be able to deliver life-size projections, zero latency and high-resolution video.

In the end, it’s up to buyers to do their homework and to determine if such cost savings compromise a quality experience. “We’ll continue to see a lot of pretenders in the marketplace that will take advantage of some of the hype and energy around telepresence,?says Hsieh.

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