Vidyo has a reputation as a disrupter in the videoconferencing space because of its all-software platform that preserves video call quality and flexibility while dramatically reducing infrastructure cost. Now, the fast-rising startup has its sights set on video interconnectivity, a hot market thanks to the needs of businesses to connect disparate endpoints for conferences without the hassle of rearranging infrastructure.
The answer from Vidyo is a new service called VidyoWay, which can connect Cisco, Polycom, LifeSize and other H.323 and SIP-based video room systems as well as Microsoft Lync clients and mobile devices. Interconnectivity among such endpoints is ground staked out already by cloud conferencing startups such as Blue Jeans Network and Vidtel.
But the big difference, according to the company, is that Vidyo is giving the service away.
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Marty Hollander, Vidyo's senior vice president of market development, said that despite many gains in flexibility of lower-cost, high-quality videoconferencing systems, the user experience is still held up by interconnectivity -- especially the use of video systems that need high-quality QoS networks to appear seamless or require similar "manual interventions" to work properly.
"Islands of interconnectivity are forming, and people are being asked to choose one or another," Hollander said. "That's good, but it's still not creating the kind of interconnectivity that people need to make it all free and easy."
All users need to join a VidyoWay meeting is a room number and PIN code, similar to the way most free audio bridging services work. VidyoWay users have a "Click to Connect" capability -- they can invite videoconferencing participants from their own address books instead of a centralized directory. VidyoWay also includes a mobile client for smartphones and tablets.
Vidyo says it will benefit from customer use of the service even if customers don't use Vidyo's conferencing software. First of all, it's a way to market Vidyo products and services without spending money on traditional marketing campaigns, Hollander said.
Second, Vidyo predicts it will build a community of connected users, creating a network effect with enough buzz that the user community will grow. Third, users happy with their experience will be incented to invest in Vidyo's other products -- the connectivity creating drag for the conferencing platform. Fourth, Vidyo will be able to pinpoint potential customers based on their VidyoWay utilization rates, then market directly to them.
"When something is free, it encourages trying it out," Hollander said. "Say you're a big user of VidyoWay and you do it from a Polycom system. But that says to us, maybe we should offer you a trial. We looked at the economics and if we were to do a pay-per-click marketing campaign, that's an order of magnitude more costly for us."
The actual MCU used in VidyoWay is a next-generation, cloud-based version of its VidyoGateway product. Service provider partners, in particular, will have an easier time selling Vidyo if that interconnectivity can be thrown in for free, Hollander said.
Hollander acknowledged the move as a "safe gamble" for Vidyo.
"We don't need to sell interconnectivity. We're not going after Blue Jeans' and Vidtel's business because we're not generating any revenue from this," he said. "We still plan to sell Gateways, but we do think this should be a free service. This is free MCU ports in the cloud. Why would anyone continue to buy MCU ports that are $10,000 a pop?"
Vidyo isn't limiting the size of VidyoWay meetings, Hollander said. But it's also worth noting that its connection isn't completely interoperable -- it does not natively support Skype, for example.
"At this moment, we don't consider Skype to be a business video solution," Hollander said. "We don't think that will be a major issue. If Skype is your preferred business desktop deployment, then there are services to pay for."
Hackensack, N.J.-based Vidyo hasn't disclosed much about its revenue but recently said that in 2011 it increased billings 82 percent and in the first quarter of 2012 increased billings 90 percent. The company claims more than 1,850 customers and has been awarded 18 patents. It has an emerging channel ecosystem, including a network of OEM partners that includes Google, Hitachi, FuzeBox, Ricoh, ShoreTel and Teliris.
The company is known for its use of Adaptive Video Layering (AVL) technology, which requires only the Internet and general data networks to optimize video quality for each conference participant. Among the company's recent technology moves were the launch of a virtualized version of Vidyo's infrastructure and the launch of a white-label program for Vidyo service partners.
Vidyo recently hired a CFO, former NTT and GE Capital executive David Kaminsky, and CEO Ofer Shapiro has told news outlets Vidyo intends to launch an IPO by 2015. Vidyo has closed about $97 million in funding since its 2005 founding.
PUBLISHED JULY 23, 2012