Videoconferencing for the Rest of Us

New technology is making the face-to-face phone call affordable. Here's how to make it pay off

Susan Smith, a principal at Service Intelligence Inc., a $1-million market-research firm in Seattle, stares into the screen of a computer at a nearby Kinko's, an international chain of copy shops that offers videoconferencing services in many of its over 800 stores. Slowly, in a five-inch-square box in the upper right corner of the monitor, a roomful of people swims into view. Service Intelligence -- which measures customer satisfaction for clients like Starbucks, NationsBank, and Brueggers Bagels -- has been hired by a bank to teach its field agents how to verify that its investment officers are delivering quality service and complying with federal regulations. Rather than conduct on-site meetings for the dozens of field agents in Miami, New York, and San Francisco, Smith is staging a single two-hour videoconference. The cost? $1,500. The same task done the old-fashioned way would have cost $6,000 in travel expenses and taken 40 hours to accomplish.

Videoconferencing is an audio and video connection. It's also a data connection. Think of it as a phone call initiated by a computer. In the corner of your computer screen is a live video image of the party you're connected to. You can see and talk to each other. You also can look at and mark up proposals, color bar charts, even photographs. The technology isn't new: for years large companies have conducted formal videoconferences from specially equipped meeting rooms linked by leased high-speed phone lines. What is new is the much lower price tag and the applications for personal computers.

Today, small businesses are getting in on the act. For less than $2,000, you can equip your PC with the software, video board, camera, and phone lines you need to hold a videoconference with a similarly equipped party. In the last year or so, vendors like Apple, AT&T, Creative Labs, Intel, and PictureTel have begun to sell videoconferencing kits, most of which include all the essential components. (See "Quick Reference," below.) Or, like Smith, you can enlist the services of Kinko's -- which uses one of PictureTel's offerings -- for $150 an hour per site.

Although vendors and early adopters are betting that videoconferences will become as commonplace as telephone calls, right now most of your customers and colleagues probably aren't equipped to receive videoconference calls. Even if they are, there's a good chance that their systems won't talk to yours. The situation is roughly akin to the early days of fax machines, when my fax couldn't talk to your fax unless we owned the same brand. To remedy the situation, videoconferencing vendors are implementing communications standards that will enable their systems to talk to one another -- a capability we should begin to see by early next year, according to Gary Schultz, president of Multimedia Research Group, in Sunnyvale, Calif.

For the time being, low-cost videoconferencing makes most sense for companies that do business in a closed environment. One way to do that is to build your entire business around videoconferencing. That's what Michael Barron had in mind when he formed Virtual Realty two years ago. This September, in Newport Beach, Calif., he launched a mortgage-brokerage business, a one-stop-shopping clearinghouse for home buyers that represents a wide array of lenders and loan products. Barron is equipping 10,000 real estate offices around the country with pcs that run ProShare, Intel's videoconferencing product, at a cost to Virtual Realty of about $6,000 per office. That figure includes the installation of an integrated-services digital network (ISDN) phone line, which ProShare requires.

Here's how the service works: A home buyer sitting in a local real estate office has just had an offer accepted on a house and now needs to apply for a mortgage. Instead of heading down the street to a bank, she takes a seat in the real estate office's conference room, where a virtual loan officer (a Virtual Realty employee) greets her from a PC screen. "We exchange information in much the same way we would in person," says Barron. With the buyer's permission -- which she grants by signing her name on a tablet attached to the PC -- the loan officer pulls up a credit check on a computer in his office, which could be thousands of miles away. If the home buyer's credit checks out, he can qualify her on the spot. The entire process takes less than an hour.

Not surprisingly, videoconferencing also is beginning to make its way onto the Internet. Tom Manley, president of newly formed INet Marketing, in Orlando, Fla., is working with Church Street Station -- a local complex of shops, restaurants, and clubs -- to help market the complex to tourists. Manley has developed a Web site with photographs of and information about the complex. Web browsers can ask for more information and print out coupons to use when they visit Orlando. Manley expects to add a videoconferencing link that will bring Web browsers face to face with Church Street Station officials or with live entertainment at the complex.

To make that happen, Manley plans to use Apple's QuickTime Conferencing, a product he has been beta-testing for the past few months. Says Manley, who expects his company to do just shy of $1 million in sales this year, "The Web site is already interactive, but videoconferencing will add a more personal dimension. And when you see a person face to face, you're more likely to buy what he or she is selling."

Sometimes it makes sense to use videoconferencing tools without the video. "Personal conferencing" is especially well suited to businesses that care more about looking at clients' documents than at clients' faces. It works in much the same way that videoconferencing does. One computer dials another by modem. The connected parties see the same document, which they can mark up and revise together. And both computers store an electronic version of the working session, a permanent record of the "meeting."

That's how Tucci, Segrete & Rosen (TSR) Consultants Inc., a $6-million company in New York City that designs the interiors of department stores for clients like Saks Fifth Avenue and Marshall Field's, uses Intel ProShare. Instead of traveling to the client's site each time he wants to review changes in a plan he's drafting, president Dominick Segrete conducts a meeting on-line.

TSR, which often holds as many as five ProShare meetings a day, began using the technology two years ago when one of its larger clients, the May Co., insisted that it do so. Unlike some other small-business owners, Segrete didn't balk at the demand. The firm already had invested heavily in technology -- spending more than $7,000 for each of its 30 pcs and sophisticated software to go with them. By comparison, the cost of ProShare was just a drop in the bucket: a few hundred dollars for each of 12 copies. (Without video capabilities, the product is cheap.)