http://www.businessweek.com/magazine/content/07_09/b4023059.htm?chan=technology_technology+index+page_telecom
FEBRUARY 26, 2007
THE FUTURE OF TECH
The 21st Century Meeting
Beam them up, Scotty: The latest gear may finally deliver on the promise of
videoconferencing
We've all been there: You're sitting at a conference table staring at a black
phone box. After months of 12-hour workdays and sleepless nights, the fate of
Project Breakthrough hangs on this one conference call. Nervous as a schoolkid
before his first spelling bee, you bark out your best pitch. Silence. In these
awkward seconds of quiet, you're left only to imagine what's happening on the
other end: Furrowed brows? Turned-up noses? Or heads nodding at your trenchant
wisdom?
This is when you wish you had sprung for that $2,500 ticket on the red-eye.
Because even the most effective conference call can't convey everything you
need to say or hear or feel in a do-or-die business meeting.
Take it from the scientists. Thirty-seven years ago, the late anthropologist
and professor of communications Ray L. Birdwhistell demonstrated that less than
35% of the message in a conversation is conveyed by spoken words-the other 65%
is communicated with facial expressions and body language. Says Matthew
Lombard, a professor at Temple University and president of the International
Society for Presence Research: "Without the visual, you miss most of the
nonverbal cues."
So it was no wonder that hopes soared last year when several tech outfits
rolled out new videoconferencing equipment that promised to fill in those
blanks. The systems from the likes of Hewlett-Packard (HPQ <javascript: void
showTicker('HPQ')> ), Cisco Systems (CSCO <javascript: void
showTicker('CSCO')> ), and Polycom (PLCM <javascript: void showTicker('PLCM')>
) seem like nothing less than a conference-room equivalent of Star Trek's
Holodeck. Taking advantage of breakthroughs in video, audio, and broadband
technologies, they purport to create experiences so lifelike that participants
who are thousands of miles apart look (and more important, feel) like they're
in the same room. "This is the next big thing," says Craig Malloy, CEO of
LifeSize Communications Inc., which produced one of the first high-definition
video systems. "It fills the gap between
absolutely-gotta-be-there-and-drink-a-beer meetings and a regular old phone
call."
BACK TO THE FUTURE
The effect is to create an illusion of seamlessness between the viewer and the
viewed. Hewlett-Packard's Halo system and Cisco's TelePresence 3000 use massive
50- to 65-in. high-definition screens to show people sitting behind a
conference table that's identical in color and shape to the one used by the
viewers. Polycom, a longtime leader in conventional conferencing equipment,
started selling in January its own advanced lifelike system, only bigger and
more elaborate, with 8-ft.-wide screens. That sense is reinforced by advanced
audio that lets everyone talk at once without canceling out any voices. Get up
and walk across the room, and for those on the other end your voice travels
with you.
But wait. Haven't we heard before that videoconferencing was going to make
business travel obsolete? Many times, in fact. Few fields have proved so
susceptible to hype. The example that first comes to mind is the Picturephone
that AT&T (T <javascript: void showTicker('T')> ) showed at the 1964 World's
Fair, only to quash it a few years later in the face of weak demand. There are
plenty of others.
So is there any reason to believe this new gear, broadly referred to as
"telepresence" systems by the industry, will come closer to changing the
business meeting as we know it-or even replacing a few business-class tickets?
To find out, BusinessWeek traveled, virtually and literally, to some of the
outfits that have plunged into this videoconferencing revolution and took their
systems for a spin.
The first thing to know about the early adopters is that these are no outposts
in an office park-they have serious green to spend. While basic systems cost
$8,000 per room, the price tag for more elaborate displays can soar to $392,000
for a room, with network management fees that can range from $6,000 to $18,000
a month.
'THIS IS INTENSE'
A typical user is private equity star Blackstone Group. Several times a week,
CEO Stephen A. Schwarzman gathers senior managing partners around a polished
conference table in the firm's New York headquarters on Park Avenue for a
five-way video call to talk about the sale of some real estate in the
Northwest, say, or a bid for Tribune Co. (TRB <javascript: void
showTicker('TRB')> ) On three wide, glistening, high-definition color screens
appear executives from Blackstone's offices in such far-flung places as London,
Hong Kong, Mumbai, or Paris. Blackstone has 40 video rooms stationed around the
world. One executive is so enthralled with the system that he keeps the
conference connection running in his office all day long. "We're big proponents
of videoconferencing because of the way it enhances the quality of meetings,"
says Harry D. Moseley, Blackstone's chief information officer.
Financial and consulting firms have been particularly avid purchasers. Deloitte
& Touche USA is installing a dozen $250,000 video suites made by Polycom so
that various business units can collaborate on outsourcing ideas or interview
job candidates from India. AIC Ventures, a real estate investment company, has
three video rooms: one in its home base of Austin, Tex., another in Dallas, and
one in Chicago. They are used for everything from reviewing new Web page
designs to celebrating the close of a big deal with a (now crystal-clear) ring
of a tabletop gong.
Industrywide, video manufacturers shipped 164,000 whole-room systems in 2006,
up 21% from 135,000 in 2005, according to Andrew Davis of researcher Wainhouse.
But that doesn't include the new telepresence systems, which in their infancy
shipped an estimated 250 units last year, according to IDC (IDC <javascript:
void showTicker('IDC')> ). The research firm estimates shipments will grow to
1,660 units in 2008.
The new systems have a see-it-to-believe-it quality that sharply separates them
from older products. It's like the first time you see a football game in HDTV
on a 50-incher in the local consumer electronics store. "Wow!" exclaims Shuichi
Ikeda, an NTT Communications (NTT <javascript: void showTicker('NTT')>
)executive, upon first seeing Cisco's three-screen setup. "This is intense."
Ikeda had popped into Cisco's New York office with some colleagues to talk
about NTT becoming a telecom partner overseas.
For the massive data capacity that makes such quality possible, you can thank
the telecom giants. Over the years they laid more efficient communications
lines, bumping up the capacity to handle video as well as voice traffic while
driving down the cost. And advances in high-def video displays have improved
screen resolution to 10 times sharper than standard color TV.
The tech advances coincide with a sense among many high-powered business people
that their travel schedules are reaching the breaking point. As companies grow
ever more global, relationships become increasingly dispersed. Today, 91% of
all employees don't work at their headquarters, according to Nemertes Research.
Life on the road was already no picnic, but September 11 added to the stress.
It was such weariness that drove Jeffrey Katzenberg to think big about
videoconferencing. The CEO of DreamWorks Animation skg (DWA <javascript: void
showTicker('DWA')> ) used to fly from Los Angeles to the company's offices in
Bristol, England, once every three weeks. He would leave at 2 in the afternoon
to arrive at 7:30 the next morning; work until 7:30 the following night; then
take a 10-hour flight back home. Plus he was on a plane almost once a week to
the company's Northern California unit. "The wear and tear on me, as well as
the handful of people flying with me, was very, very hard," Katzenberg recalls.
CRYSTALLIZATION
In the fall of 2002, Katzenberg challenged his tech team to come up with a way
to bring his creative people together virtually. Katzenberg, an experienced
producer whose life is all about bringing characters to life on screen, pushed
his team to create something that made the technology transparent and the
experience nearly real. For help, CIO Ed Leonard went to HP, a longtime
DreamWorks technology partner. HP completed the system in late 2005 and rolled
it out as Halo last year.
The system that DreamWorks refers to as its B2B room mimics a typical
boardroom, with a large conference table. Meeting participants sit on one side
of the table, and their remote colleagues sit opposite them, behind a similar
wood table reflected, mirror-like, on three giant flat-screen monitors. A
fourth screen, situated above the other monitors, allows all participants to
view the same drawings and storyboards as they talk through animated movie
scenes.
A modified version of the system is on display one February day as Katzenberg
and a creative crew work out some scenes with comic Jerry Seinfeld for an
upcoming animated film, Bee Movie. Seinfeld has two large, black flat screens
arranged in a "V" in his midtown Manhattan office. He sits in a black desk
chair, a tan sofa behind him. Katzenberg sits on a couch in his Glendale
(Calif.) office, facing a single screen. In a surreal way, it feels as if
Seinfeld is in the same room.
In the movie, a bee (with Seinfeld's voice) leaves the hive and discovers, to
his horror, that humans have been stealing his honey. In this session, Seinfeld
freely suggests tweaks to the script, as if he's pushing paper across the table
to Katzenberg and crew. "Can we do that thing with the truck?" he asks. "Just
go back to that moment and let me see lines with the pictures," Seinfeld says.
His right screen quickly morphs as someone in L.A. types the new language onto
the screen. Almost instantly, the applicable storyboard is up on the monitor.
Both sides scroll back and forth without much fuss or confusion. "It's been
phenomenal," Seinfeld says later. "I wasn't going to move to L.A., so I don't
think Jeffrey and I would have made the deal if this wasn't possible."
Such face-to-face encounters allow participants to discover meaning-the
understanding of an idea, the crystallization of a concept-in ways that might
not have been achievable otherwise. Consider a recent meeting at McKesson Corp.
(MCK <javascript: void showTicker('MCK')> ), a major supplier of medical
equipment and services. Two tech staffers in the San Francisco headquarters are
faced off with three others in the Atlanta area offices over a Cisco setup,
discussing how to conduct a virtual trade show with vendors. About midway
through, the CIO, Randall N. Spratt, walks in and takes a seat in San Francisco.
If the meeting were done over the phone, those on the other side would have had
no idea their boss was in the room. But via video, the Atlantans sit up and
lean forward upon seeing Spratt. He fires a string of questions at colleague
Eric Sugar: "Aren't we telling vendors we don't need your salespeople?" he
asks. "Have you talked to vendors about this?" Sugar turns away from the CIO,
looks directly at the monitor to address someone in Atlanta, and asks a
question without having to mention whom he's talking to-it's clear to everyone
in the room. The colleague in Atlanta responds and everyone nods in
affirmation. "Great idea," Sugar says.
Imagine how this exchange would go with herky-jerky video and audio. "There
would be pauses that stifle creativity," Sugar says. McKesson, which has tested
Cisco's system for several months, plans to add 7 to 12 rooms to its existing 2
this year. The company estimates it would spend $1,100 to fly in the same
people, so just 2.5 trips per week pay for use of the video room for that week.
Says Spratt: "To a person, we would rather use this than travel."
Still, is there any evidence that videoconferencing-no matter how
realistic-will put a real dent in business trips? Not yet. At their current
prices, telepresence systems are being used mainly by very large corporations
and big-time executives, who, as Lee Doyle, IDC's vice-president for
networking, puts it, get "sick of being on a plane." But overall demand for
corporate travel remains robust, according to American Express (AXP
<javascript: void showTicker('AXP')> ) Co.'s Business Travel Div. In fact, a
survey taken at the end of 2006 by the National Business Travel Assn. found
that 68% of corporate travel managers expect their companies to take more trips
this year than last.
That could change. With fuel and other expenses rising, the cost of the average
business trip-including airfare, car rental, and hotel-is expected to climb
nearly 5% in 2007. Analysts say the price of new video systems should drop by
10% to 15% a year.
As technology costs come down, organizations also may find ways to adapt it to
their distinct cultures. Not everyone wants or needs a full-blown conference
room setup. Consider HOUSE Productions & Casting, a New York outfit that
organizes and conducts auditions for movies, TV shows, and commercials. A
boardroom setting would make these artists' skin crawl. So in their loft-like
offices on the lower West Side of Manhattan, they've installed a system by
LifeSize Communications with a single high-def, 50-in. screen used to view
participants auditioning from West Hollywood, Calif. Says Adam Joseph, house's
creative and casting director: "We're the chill, relaxed videoconferencing
place."
At Cisco, CEO John T. Chambers imagines a day when high-quality video
technology is so affordable that households will connect to each other via
videoconferences simply to "hang out," one living room connected to another.
It's back to the '64 World's Fair, but with broadband and high-def TV. But why
stop there? In a move that invokes Marshall McLuhan's global village, Cisco
announced in January that it is donating complete systems to the governments of
five nations: Egypt, Jordan, Lebanon, Turkey, and the United Arab Emirates. The
idea is to improve communications and collaboration among those countries by
harnessing the capabilities of high-quality video.
In a world fraught with political and cultural tensions, video presents an
opportunity to at least begin discussions, says Temple University's Lombard.
"Here's an opportunity for [people] to meet on an equal basis and do it more
regularly," he says. "It's not going to make people get along, but it allows
them not to be isolated."
By Roger O. Crockett, with Megan Tucker in New York
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