Cisco banks on IP video

The networking giant announces the latest version of its Internet Protocol-based PBX call manager software, which integrates video conferencing into its IP telephony solution.

Marguerite Reardon Former senior reporter
Marguerite Reardon started as a CNET News reporter in 2004, covering cellphone services, broadband, citywide Wi-Fi, the Net neutrality debate and the consolidation of the phone companies.
Marguerite Reardon
3 min read
Video killed the radio star, and now Cisco Systems is betting on it to help it sell IP telephony to large corporations.

On Wednesday, the networking giant announced the latest version of its Internet Protocol-based PBX call manager software, which integrates video conferencing into its IP telephony solution.

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"Cisco is trying to increase the functionality and value of a converged network that handles voice, video and data," said Chris Kozup, an analyst with the Meta Group. "The driver for IP telephony will vary with every enterprise, but clearly Cisco is hoping that new features like video telephony will help increase the value of its solution and ultimately put it ahead of its competitors."

Release 4.0 of the CallManager software incorporates a new feature called Cisco Video Telephony (VT) Advantage, which allows real-time person-to-person video sessions to be added transparently to telephone calls. With Cisco VT Advantage and Cisco CallManager 4.0, users can create an instant face-to-face video call. The company says that it can bring broadcast-quality video and sound previously unavailable to most video conferencing systems.

Cisco has sold more than 2.6 million of its IP telephones into the market. But Marthin De Beer, vice president and general manager of IP Communications at Cisco, admits that it hasn't been easy pushing a pure IP solution into the market place. Nortel Networks and Avaya, which sell hybrid PBXs, let companies migrate to IP telephony at their own pace. Companies can use existing digital phones and add IP functionality later. But Cisco provides a pure IP telephony solution that requires customers to deploy Cisco IP phones on every desktop.

"The PBX incumbents have had an advantage when it comes to migrating current telephony networks to IP," De Beer said. "We believe this new feature will show new capabilities that won't be able to be matched by hybrid players."

Desktop video conferencing is already available from several companies, but Cisco claims the applications are hard to use, expensive to operate, difficult to manage and offer poor-quality resolution. These companies, such as Polycom and VCon, sell only roughly 6,000 units per quarter, said Brent Kelly, senior analyst and partner at Wainhouse Research. Such products use similar voice over IP technology (VoIP) as Cisco, but they have not integrated their solutions into an IP PBX. As a result, video conferencing runs as a separate application.

Demand for desktop video conferencing is expected to increase as Microsoft rolls out versions of its Windows XP software that incorporates video conferencing.

The advantage of Cisco's solution is that it integrates video into the telephony application. Using a Cisco IP phone, a personal computer and a Cisco camera, users can launch video conferences right from their desks by simply dialing a phone number. The VT Advantage feature also interoperates with multiple new and existing desktop and room-based videoconferencing systems.

Cisco is not the only company offering an integrated video solution. Mitel Networks offers video conferencing as part of its VoIP offering, called Voice First Video. Nortel also claims to have incorporated video in its Multimedia Communications Server.

"Adding video to VoIP deployments is a natural evolution of the technology," said Sue Spradley, president of Wireline Networks for Nortel. "Enterprises will deploy the technology first, and then we'll see service providers offering it as a service to consumers."

But analysts are skeptical that video alone will justify the cost of deploying an IP telephony solution in a large company.

"The killer application that will drive mass IP telephony deployments hasn't been found yet," Kelly said. "IP video is an attractive add-on, but I don't think Cisco's going to sell millions of IP phones tomorrow because it now offers this feature."

Cisco CallManager 4.0 software with a Cisco Media Convergence Server starts at $5,995. The hardware and software is currently shipping. Cisco VT Advantage 1.0 is $190 per user, including the camera. The product is expected to ship in April 2004.