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To be sure, teleconferencing won't provide the satisfaction of closing a deal with a firm handshake. And it still makes sense to form new relationships in person, then use videoconferencing to maintain them. But grounded executives are finding that today's high-quality videoconferencing allows them to look clients in the eye and read body language--sometimes more clearly than they could in person. The technology is disarming because participants sometimes forget they're being watched.
The improved quality and lower prices of videoconferencing were attracting attention even before Sept. 11, as the tech recession and the beginnings of the slowdown elsewhere in the economy had companies searching for ways to save on travel. A conventional system like Polycom's ViewStation 512 can receive multiple video calls and allow data transmission with connections that look and sound like network television. In 1994 a less capable unit cost about $70,000. Today a corporation could equip four offices for less than $25,000.
Pharmaceutical giant Bristol-Myers Squibb has been using videoconferencing since 1991, when it paid $500,000 to build a special room with enough enhancements to ensure optimal quality. In recent years Bristol-Myers has used the technology to connect as many as 130 sites for one meeting, allowing scattered researchers to compare clinical data and discuss projects. "We use it in all aspects of our operations, from discovery to development to commercialization," says Mark Lamon, who oversees videoconferencing for the company's research-and-development unit.
Sales of videoconferencing hardware totaled $1.1 billion last year, according to Wainhouse Research, which tracks the industry. Auxiliary businesses also did well. Telecommunications companies like Verizon and Southwestern Bell, which provide the digital ISDN lines that are used for 80% of videoconferencing communication (at about 60[cents] per minute) posted more than $3.6 billion in videoconferencing-related sales last year. Bristol-Myers Squibb alone logged 2 million minutes in videoconferences (which in turn saved the company hundreds of millions of dollars in travel expenses). Wainhouse projects that revenues for connection services related to videoconferencing will top $8.6 billion in 2005.
FocusVision, a Stamford, Conn., company that runs videoconferencing facilities for focus-group market research, has expanded rapidly since 1997, after slow growth in the early '90s. Last year it landed several dream clients, including Coca-Cola and Colgate. "Once people try this, the comptroller won't let them travel anymore," says FocusVision president John Houlahan.
Before last spring, videoconferencing supplier Forgent was known as VTel and was one of the top sellers of hardware. But the company decided that it could do better in the burgeoning software business. Forgent software monitors video-call connections and allows IT managers to quickly diagnose failures in the system--including failures by phone companies.