York Telecom: Prime Time For A Video VAR

As videoconferencing becomes an increasingly hot opportunity for solution providers, the channel players that win will be those with the best combination of video partnerships, endpoint and infrastructure expertise, and managed services muscle. And David Phillips is sure that description fits York Telecom, a growing Eatontown, N.J.-based solution provider and managed services specialist, to a T.

Phillips, a 30-year IT veteran, joined York Telecom as president and COO in late March, part of a changing of the guard at York Telecom that found former president and COO Ronald Gaboury stepping into the role of CEO. York Wang, who founded the company in 1985 and is its former CEO, is staying on as chairman of the board and York Telecom's majority shareholder.

Among other career highlights, Phillips was COO of networking VAR ACS Dataline, but many in the channel know him for the two and a half years he spent at Polycom, where he was senior vice president, worldwide sales until February 2009.

Phillips' years at Polycom ran parallel to a breakout period in video, when it moved beyond a niche technology play into a key piece of many vendors' and solution providers' UC strategies. For a while, the enterprise videoconferencing space was a clash between Polycom and Tandberg, Phillips said, and then more and more solution providers saw the combination of bandwidth availability, video quality and video-related services as creating opportunity for video.

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"The dynamics of the vendors changed irrevocably," Phillips said in a recent interview with CRN. "You had a nice, quiet little duopoly, really, between Tandberg and Polycom, and then you had LifeSize and Sony and others. But a couple of things happened. The technology itself came of age in 2007, particularly when HD was launched with videoconferencing, and then you had telepresence and the innovation in the products and the networks."

Phillips credits Cisco CEO and Chairman John Chambers for being "the world's biggest promoter of videoconferencing" and helping to shift the conversation around video from a commodity endpoint product type of sale to a consultative, higher-level business conversation. Current competition in the video space kicked into higher gear, Phillips said, when Cisco pulled the trigger on its $3.3 billion acquisition of Tandberg in 2009.

Consolidation has been ongoing in the space since then, with recent moves like Microsoft's $8.5 billion play for Skype and Polycom's grab of HP's videoconferencing business as key examples.

NEXT: Video Market Not Crowded Yet

The video market is as crowded as it's ever been, but to Phillips, who provided consulting between his departure from Polycom and his hiring at York Telecom two years later, it's still not that crowded.

"The VAR community even today is actually quite small," he said. "There can't be more than a few thousand people in the channel who actually know how to sell and implement videoconferencing properly."

A solution provider with detailed knowledge of how to do those things -- video, voice, collaboration -- plus derive significant revenue from advanced service offerings such as VNOC (video network operations center) hosted services, help desk, media services and consulting will be in high demand, Phillips contends.

"What [the market] needs is someone who can take up a position of dominance in the industry. No one at this point in time, from a customer perspective, is the dominant player, not even the service providers," he said. "So as I look across the landscape, York represents one of the best VARs for managed services around. I've been very impressed by both the people and the business."

In addition to its voice, video and collaboration focuses, York Telecom has a growing digital signage practice and a sizable presence in the public sector channel, including a 10-year streak of federal government business recently broadened by a five-year extension to its General Services Administration (GSA) contract.

"The way the company is structured opens up the possibility for scalability," said Phillips. "When I was at Polycom, York was always a great customer and partner, but we didn't always hear too much from them and they were a little bit below the radar. I've learned that they're a best-kept secret, and they have some really good customers. We're looking to get a lot more visibility."

Infonetics Research recently pegged annual revenue for enterprise videoconferencing as having grown 18 percent in 2010, becoming a $2.2 billion market by the beginning of 2011 and expected to more than double by 2015.

That kind of growth opportunity means solution providers and vendors need to sharpen their sales pitch, Phillips said, and put video in a more practical context.

"I see CIOs' eyes glaze over and they want to jump out the window," he said, when asked about challenges selling video to enterprise customers. "They need someone who can say. 'Don't panic, here's how to do it and, by the way, we'll manage it for you.' "

Too few vendors have shifted their focus on video sales through the channel from a conversation about endpoints to a conversation about services, Phillips said. But it’s managed services and integration services where solution providers can make the most money -- especially given video's place in the broader context of UC and cloud-based infrastructure.

"There's plenty of good product around," Phillips said. "What the vendors have to do is stop building products and consider what the endgame is."