High Travel Prices Leading to More Web and Video Conferencing

Though high fuel prices have dipped in recent days, airlines are preparing for tough days ahead by cutting routes to certain cities, adding fees for luggage, food and pillows, and warning of fare hikes ahead.

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This reality has led to more companies to purchase video conferencing and virtual meeting software for employees and customers to communicate with one another in real time, according to vendors and analysts familiar with the market.

“Up until now, business travel has been a cultural thing. People say, ‘I have a meeting, so I have to go there,'” says says Claire Schooley, a Forrester analyst that researches video conferencing technologies. “Because of the expense, and the wear and tear traveling has on people, that seems to be changing.”

In the end, the gravitation towards video conference and meeting software will be purely economical. A recent report by the Travel Industry Association found that air prices in June rose 18.7 percent from the same period a year earlier. Fuel prices were up 33 percent. Airlines, desperate to fill seats, have been running routes with heavy losses, and their ability to do so will wane during the coming year, airlines executives told National Public Radio.

Businesses, who have also been dealing with an economy in recession, have begun responding by tightening travel budgets. Orbitz, the popular travel site, surveyed more than 600 business managers, 79 percent of whom said they felt pressure to cut their travel budgets.

Due to the economic factors and improvements in image quality, the vendor landscape around virtual meeting products and video conferencing software has matured during the past year, says Forrester’s Schooley. While there are numerous offerings, it’s essentially broken into two categories. One is the high end video conferences offered by vendors such as Cisco, known now as telepresence. Telepresence involves setting up huge flat screen televisions in high-definition (HD), where attendees appear life size to one another (see CIO’s feature on telepresence here).

But telepresence is expensive. Cisco charges more than $300,000 for an installation. So lower cost alternatives have begun to gain traction in the market, even some developed on open source technology. The Boston-based Dimdim is one such alternative.

Dimdim provides a Web-based portal in which meeting participants can share and interact with documents, and view each other through video if their computers have a web cam. The package of software is known as web-conferencing.

Dimdim is free for up to 20 users, and because people access it over the Web and Dimdim hosts the data on their own servers in a software as a service (SaaS) model, companies need not download software on their own machines. The enterprise version of Dimdim (which is how the company makes its money), supports up to 1,000 people in one meeting room, costs just under $2,000.

DD Ganguly, CEO of Dimdim, says this low cost and ease of use has helped the startup vendor, which recently took $6 million in venture capital funding from Index Ventures, Nexus India Capital, and Draper Richards, thrive in the emerging web conferencing market.

“The affordability has been a big part of it,” Ganguly says. “Because we are open source, we can integrate and customize our software for our customers.”

Dimdim is trying to disrupt the predominant key player in the web conferencing market, the Cisco-owned WebEx. WebEx is more expensive, with its basic web conferencing offering costs $375 a month for five users.

But a spokesman for WebEx, Colin Smith, says the vendor provides more upsides to businesses than cheaper alternatives like Dimdim, mainly around customer service. “If you have a meeting with customers and five can’t get in, you need to be able to call someone and be backed by a quality customer service,” he says. “These free services are interesting but have limited capabilities. They don’t integrate with unified communications solutions.”

Smith says that a couple years ago, WebEx customers primarily used the product for document sharing and to view presentations. But as webcams are included with more PCs and laptop computers, and WebEx increased its scale and bandwidth improved, more people have begun using the video conferencing feature.

Smith estimates that use of video conferencing has increased 20 percent month over month. Ganguly of Dimdim has seen increases in video conferencing use as well as overall improvements in engagement with virtual meetings. In July alone, the company hosted 32,000 meetings for its various clients.

Forrester’s Schooley says that neither WebEx or cheaper alternatives like Dimdim offer the same picture quality as the telepresence system, but because of the expense of the latter, and rising travel costs, there will no doubt be a market for them moving forward.

“I don’t know how long it will take, but video will become a part of what you do,” Schooley says. “It’ll be there and be assumed, especially if prices keep going up and you can get somewhere without making a bunch of [airport] connections.”