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.)

Is personal conferencing working for TSR? Yes. Segrete says travel expenses have dropped dramatically, which makes clients, who foot the bill, happy. And meetings themselves are shorter. "When you travel across the country, somehow you feel obligated to make meetings longer," he says. Another unanticipated benefit: junior employees, who in the past never interacted with clients, are sitting in on ProShare meetings. "It's a good way to grow their skills," says Segrete.

* * *

Low-cost videoconferencing is still in its infancy and suffers from some serious limitations. Regardless of whose product you use, you aren't going to get tv-quality video on your computer screen. Video quality, largely a factor of speed, is measured in frames per second. tv images move at 30 frames a second, which creates a real-life effect known as full-motion video. Even top-of-the-line videoconferencing equipment using high-speed leased phone lines provides a sub-TV 20 or so frames per second. On the PC-based products, computer images generally move slowly, in herky-jerky fashion, across the monitor. If you're transmitting video signals over ISDN phone lines, which most vendors require, you can expect about 15 frames per second -- which is often fine for business videoconference users.

Most phone companies now offer ISDN phone service, at a typical installation cost of about $90. You can get by without it: Creative Labs' ShareVision, for example, runs over regular phone lines, or "plain old telephone service" -- POTS, to true videoconferencers. But quality drops to around five frames per second. The image is like a still photograph that moves around a bit.

* * *

Although it can be a very effective tool, videoconferencing is unlikely to replace one-on-one meetings altogether. Christian & Timbers Inc., a $10-million executive-search firm, conducts four or five videoconferences a day. When Jeff Christian, president and ceo, interviews job candidates for Apple and other high-tech clients, he always looks for four qualities: intellect, enthusiasm, leadership, and integrity. He feels comfortable evaluating the first three in a videoconference. "But I need to be in the same room to sense whether or not a candidate has integrity," says Christian.

Christian & Timbers started out using Kinko's videoconferencing service but recently outfitted conference rooms at its headquarters in Cleveland and branch offices in Boston and Cupertino, Calif. Christian, who conducts only preliminary interviews via videoconference, estimates that he spent $150,000 to set up the conference rooms, a figure that includes lighting, furniture, PCs, and PictureTel's product. In addition he's spent about $150,000 for Kinko's videoconferencing services, which he still uses occasionally. He estimates that he's saved tens of thousands of dollars in travel costs.

But he remembers something his grandfather told him: "Don't write anything you can't say over the phone; don't say anything over the phone you can't say in person." And, says Christian, "if my grandfather were here today, he'd say, 'Don't communicate via videoconference if you can communicate face to face.' So I still do as much as I can personally."

* * *

Jennifer deJong ( is a freelance writer based in Wilder, Vt.


Category: Multipoint videoconferencing

Vendors: Avistar Systems, Palo Alto, CA (Avistar Collaboration System); Compression Labs Inc., San Jose, CA (Cameo)

Costs: Geared for networks. Priced at $3,000 per seat for workgroups of about 30. Price includes software, cameras, video boards, workstations, and servers.

Video quality: Excellent; 30 frames per second

Category: Rollabout systems

Vendors: PictureTel Corp., Danvers, MA (PictureTel Group Systems product line, including Venue 2000 and System 4000EX); vtel Corp., Austin, TX (S-Max Platform 127S)

Costs: Geared for conference-room use; stand-alone systems, designed solely for videoconferencing. Prices start at $13,000 and go to about $40,000. Price includes all hardware and software.

Video quality: Good; approximately 24 frames a second

Category: Desktop videoconferencing

Vendors: Apple Computer Inc., Cupertino, CA (QuickTime Conferencing); AT&T Global Information Solutions, Dayton, OH (AT&T Vistium Personal Video); Creative Labs Inc., Milpitas, CA (ShareVision PC3000); Intel Corp., Hillsboro, OR (Intel ProShare Personal Conferencing); PictureTel Corp., Danvers, MA (PictureTel LIVE PCS 50)

Costs: Geared for point-to-point video- and document-conferencing use; systems run on pcs. Priced from about $1,800 to $5,000 per workstation. Price typically includes software, video boards, and a camera.

Video quality: Fair to poor; 15 frames per second for products that use an ISDN phone line; 5 frames per second for Creative Labs' ShareVision, which uses standard phone lines

Videoconferencing Vendors

AT&T Vistium Personal Video

AT&T Global Information Solutions

Dayton, OH


Intel ProShare Personal Conferencing

Intel Corp.

Hillsboro, OR


Kinko's Service Corp.

Ventura, CA


PictureTel live pcs 50

PictureTel Corp.

Danvers, MA


QuickTime Conferencing

Apple Computer Inc.

Cupertino, CA


ShareVision PC3000

Creative Labs Inc.

Milpitas, CA


Bear in Mind

If face-to-face contact isn't an essential part of the business transaction, you're probably wasting your money on videoconferencing.

Be realistic. The video images you'll get from a $2,000 desktop system will move at only 15 frames per second -- half the speed of tv.

Most systems don't talk to one another yet. Make sure the party you want to do business with is equipped to take your call.

No matter how well it works for you, never let videoconferencing replace all of your one-on-one meetings.