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January 2009 | Volume 12/ Number 1
Publishers Outlook

Vidtel Targets the Video-over-IP Market

Distributors and resellers tell me that video communications products have been selling handsomely in recent years. Even consumers have caught the bug, as Skype (News - Alert) execs can attest to their increased video penetration. Just as importantly, consumers seem to love to ditch their PSTN connections. They are going gaga over VoIP services from the likes of the cable companies, AT&T, Verizon, Vonage (News - Alert) and others.

If you read the above carefully, you may have noticed an opportunity worth pursuing: Consumer video-based IP communications, or, in laymen’s terms, “videoVonage”.

A pure-play IP communications service provider is an interesting idea. If I had to come up with the ideal person to run such a company, who would I pick? Someone who was picked as one of the Top Voice in IP Communications by Internet Telephony (News - Alert) and someone who has seen the market progress over 10 years and has a lengthy resume in the space.

One such person is Scott Wharton, and he is a veteran. He worked at VocalTec (News - Alert) – the company that launched the VoIP industry. He’s spent the last nine years at Broadsoft, a leading application server company. This past April he left Broadsoft, went to Silicon Valley, got funding and is just now starting up a company called Vidtel, a pure-play consumer video service.

For $199, you get a Grandstream Networks (News - Alert) videophone which allows a predetermined zoom level and a quality speakerphone. Moreover, you can choose from two classes of services. The standard plan costing $14.95 per month gives you traditional calling features, free directory assistance, call notification, do not disturb, unlimited video calling, video mail (with forwarding to your inbox), a traditional telephone number and E911. For $29.95 per month you get simultaneous ring and unlimited calling in the U.S. and Canada instead of having to pay for 3.9 cents per minute. Moreover, if you pay in advance, for $100/year you can get the standard plan and for $250/year you can purchase the premium plan.

Such a great price point should make this service attractive to SMBs. After all, at $199 for a videophone and low VoIP rates, there is no risk – especially when you factor in the money-back guarantee.

Although the phones have video screens, they act as traditional phones when not talking to another Vidtel (News - Alert) phone. The screens can view XML feeds and you can see the latest headlines on the screen when you aren’t using the phone. The install is truly plug-and-play. Firewall and NAT traversal issues didn’t appear at all. When the phones are plugged in they find the Internet and download the latest firmware. A few minutes later you’re ready to go.

Wharton wants to eliminate the walled garden model so common these days. So, instead of keeping his phones talking only to other Vidtel phones, he is working to connect them to Skype, Google (News - Alert), mobile phones, desktops, corporate videoconferencing and other video solutions. With Wharton’s background at Broadsoft helping carriers provide enhanced services, we can expect the Vidtel service to undergo rapid improvement. Wharton mentions that Moore’s Law is going to make the devices cheaper, although they’re pretty affordable now at $199. In fact, in a video interview via his service, Wharton told me that trial customers were already buying new phones even though the service hadn’t officially launched yet.

I firmly believe that if you launch a company which solves people’s problems, they’ll pay for your product or service. Indeed, the iPod turned out to be a product that solved a problem we didn’t even know we had – the gadget became a “category creator”. Vidtel could become a category creator as well.

In my long weekend of testing I really found the service useful and I hope Vidtel kicks off a new category of service provider and forces more innovation into the market. After all, Wharton knows this business well and knows what buttons to press to get consumers interested and to make competitors nervous. IT

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