Video Conference Vidyo

We’re going to the presentation… So what’s in store for the future? I want us to take a little bit into my crystal ball and see if we can suggest future ideas and what lies in front when we talk about future video. One of the things that are very important when you talk about video, and it always was a problem historically, is it’s all about quality. Quality of video has to be such that people will get what they expect. What do they expect? When you say video, the only reference point we have as users is essentially TV. So we expect an image that looks more or less like a TV image and the reality is that in most traditional video conferencing set ups that’s not we got. Either it was in a set up of one camera in not very high resolution covering a whole room, so the people there are kind of tiny as you can see in this image, or the picture was broken up due to transmission errors. Did anyone ever see video images broken up in a transmission? If you ever saw it, raise your hand please. Okay".

Ofer Shapiro: “Immersive telepresence will always be there. It’s an amazing thing. It’s an experience that is like sitting there in a studio environment, but it really needs to be complemented by the much larger number of endpoints maybe by several orders of magnitude of personal small meeting rooms, executive appliances and of course mobile devices in the future. So another thing that is happening is that enterprise deployment is going from just room system deployments to desktop deployments. Just to get a feel of what does it mean number wise, the video conferencing appliance world today is really an aberration from a communication market point of view: 200000 systems every year. What Gartner are saying to us is, they believe we will get in a few years to 200 million paid endpoints. This is not counting Skype. 200 million endpoints. So this huge, huge growth in the number of endpoints will yield new challenges because it is not going to be about I have a good endpoint, no, no, no. Buy from me because I have a better endpoint. It’s about how do we manage it. How do we manage the bandwidth, how do we manage the infrastructure?”

Ofer Shapiro: “So there has got to be a way to manage the bandwidth better in two parameters. One, get rid of the need to have high quality of service and the second one is getting rid of some of the bandwidth that has to go between the site by having the right architecture to deal with it. Talking about architecture, let’s look at traditional architecture for conferencing, because desktop, it’s worth noting, almost every call becomes a conference call when you go to personal devices. Traditionally, this was done by some central entity that’s called a Multi-phone Conference Bridge, or an MCO for short and that type of bridge was basically decoding and re-encoding and kind of shaping the information for every participant. That means that for every cycle of processing that you have for video compression at the endpoints you need the same thing at the MCO. Since the endpoint number is growing, it’s just not sustainable to put that much of a hardware and what you get is a lot of sensitivity to packet loss. You get a lot of cost because of the amount of hardware that is required, and a lot of latency, because this extra processing in the conference bridge adds to the latency that is native to Voice over IP calls or Video over IP calls.

Ofer Shapiro: “So the MCO architecture, the traditional way to do conferencing, simply does not scale in that world. What’s scale? What scale is, imagine that you could have solved the problem of the conference bridge. Eliminate it. Replace it with something that is more like a router. That scales like a router, does not have any latency, and is based purely on software and can have all sorts of good mechanisms that people would need, for example, in some hour or part of the day the ports are being used in Hong Kong and in another part of the day they are being used in New York, as they follow the sun. Having the ability to have no latency conferencing, allows you to actually localise

conferences, localise local participants so to speak in the continent, in an office and save the bandwidth between the different offices. If you are able to run on a non-QoS network, you further decrease the problem because now it’s less expensive. You can run on the converged network. So the future world, if we can deal with that fundamental infrastructure problem, looks like this. You have the telepresence room just like you have them today, but they connect to those personal devices, and there would be 10 times or 100 times more personal devices in telepresence rooms. And that’s not all because now you’re starting to add all those things in the mobile side like netbooks on a 3G or a Smartphone that runs on a 3G or a 4G connection. In that environment, you’re getting to a more stable value proposition. If video communication is segregated to the room, then it’s, by definition, less useful because snowed in right, everyone stays at home, you’re sick, you just don’t have access to it because you’re on the road, all of those type of parameters make it less useful and less dependable, and once you get to the point that you can access it from anywhere, or almost anywhere, any device in any network that you connect to, then you’ve got ubiquity, then people get to rely on it coupled with the right quality and coupled with the right price points. So when we started the company, our goal was to put video conferencing price and performance in line with user expectation. Just as a reminder, expectation is TV-like and latency like a phone. The price point: Like voice! You want it to be a no-brainer. If you start to say, I will pay double or triple or quadruple, not to mention 100 times more like in a telepresence scenario, you have to start thinking: Is it worth it to have a video call? We don’t want people to think about it is worth it. We want people to just use it just like they use a phone today. I remember my grandmother’s generation, they were thinking about placing a phone call. It was like an event to call our uncles in the US when we lived in Israel, because it was something you did for the holidays, and the rest of the time it was letters. At some point it became a no-brainer. We call just to say hey, what’s the weather over there. The same thing will happen with video

communication. That’s growth potential that Vidyo should have. So the next generation infrastructure that is needed is something that will address those challenges. How do we get it off the QoS network, so we can use low cost bandwidth? How do we work on any network to make the experience ubiquitous? 3G, 4G WiFi on top of the general Internet and of course the converged corporate networks and of course, end users broadband connections. We believe a big part of it is in the architecture based on H.264 SVC, and we believe that a key thing is to design an infrastructure that could really scale from the 200000 endpoints of today to the 200 million endpoints of 2015. This is the key thing, and people are starting to realise it. We talk to a lot of people in the enterprise, in the carrier space, in the service provider space and everyone starts to gradually realise that you have to take care of these two parameters: How do you scale the infrastructure while maintaining the cost, and how do you provide the quality that people expect, so they’ll actually use it? Just leave you with one more interesting thought. Service revenue in general is always bigger by a factor of 10 than the equipment revenue in a given market. So in the video conferencing market, we have an interesting anomaly historically. The service revenue is 10 times smaller than the equipment market and why is that? Because people don’t have a lot of repeated use. So the $1.5 Billion market for equipment that video conferencing has today suggests that there is a potential for a $15 Billion service industry which is about to happen. Carriers are very hot about providing it and this is something that we expect to see in the coming years. We believe that if all these parameters will be fulfilled, we see that long promised explosion in video communication. We personally, as an organisation, are talking to people that are early adopters, and we see those deployments that are happening. We see people, that are specific organizations, that are buying infrastructure to communicate to 100000 people worldwide. That’s a single organisation. So these types of things actually happen and they will happen more and more.”

The following Facts and Figures are from a recent Press Release:

Vidyo Corporate Summary

Vidyo is leading the way to a market-changing paradigm shift in video conferencing.   VidyoConferencing™ was built from the ground up; the first to utilize the revolutionary new H.264/SVC standard, leveraging the unique advantages of Vidyo’s patented VidyoRouter™  architecture. This architecture enables higher resolution endpoints to interact seamlessly with a full spectrum of delivery systems, from lower resolution endpoints such as a handheld device or smartphone over a wireless network, to desktops and laptops, and even high end telepresence-quality room systems.

Central to this groundbreaking approach is Vidyo’s patented intellectual property that leverages the SVC standard and allows Vidyo to achieve personal telepresence: natural, multiparty communication using HD video conferencing. This is accomplished without the use of a bottleneck-causing Multipoint Control Unit (MCU) – a device that is needed by all legacy video products to achieve HD multiparty videoconferencing – without the limitations and high costs of other systems. Because VidyoConferencing was specifically developed to work over general-purpose IP networks, including the Internet, it provides vastly improved video quality, lower network requirements and a highly scalable solution that can be deployed anywhere there’s an Internet connection. That means anyone can participate in multiparty HD (up to 1080p 30 fps ) Vidyo conferences from a laptop, a desktop or a room. Whether in the office, at home, or in a hotel room, Vidyo enables anyone, anywhere, at any time to engage in top quality video communications via the Internet on a PC or a Mac. Vidyo, headquartered in Hackensack, NJ, is backed by $45 million in venture capital.

Customers

Over 120 global enterprise customers, including conferencing service providers.

Resellers

44 in Americas (US, Canada, Mexico, Columbia, Brazil)

04 in Australia and New Zealand

11 in Asia (Taiwan, Japan, Hong Kong, China, Singapore)

34 in EMEA (UK, France, Germany, Italy, Holland, Belgium, Switzerland, Sweden, Norway, Finland, Hungary, Turkey, Greece, Israel, UAE)

Venture Capital Funding: $45 Million

Raised in 3 rounds.  Investors:  Menlo Ventures, Sevin-Rosen, Rho Ventures and Star Ventures.