One video company has come up with a novel way to sell video phones. It starts by acknowledging that people neither want nor need them.

by Alex Goldman ISP-Planet Managing Editor [October 25, 2004]

Video phones are not popular yet. The average home—even the early adopter home—is not likely to have a video phone. VoIP company Packet8 has released a guide to videophone etiquette that we think is optimistic. In his blog, Jupiter Research senior analyst Joe Laszlo is even more blunt, noting on August 17th, "Would suggest the next time the folks at Packet8 go to revise this list, they change the title, from Videophone Etiquette: A Dozen Amusing Lessons to Videophone Etiquette: Why This Stuff Will Never, Ever Take Off."

Enter St. Louis, Mo.-based Vibe Solutions Group, whose pitch to ISPs starts by acknowledging that end users don't want its video phone.

"We saw a need for a very simple video-centric application that would synchronize video and audio so that people could share photos and home or PowerPoint files at work," says Brad Herrick, Vibe Solutions Group's vice president of marketing.

The company is focusing on delivering three applications that it feels customers want. Since it's developing this application with Comcast, it has a large customer sample size to experiment on.

Once you enable people to send a video e-mail, Herrick says, you enable three things that people want to do with their broadband connections. "You can send a basic video of up to 45 seconds, with the maximum length determined by the ISP. You enable greeting cards, which consist of a text message plus video. And, third, you enable photo narrator mode where you import photos or slide and share them or record your voiceover."

The e-mail contains a link and the video is stored on a Vibe Solutions Group server in Windows Media Player format. When the recipient clicks on the link, the video is downloaded and starts playing.

Jupiter Research's Laszlo agrees that video e-mail is an intriguing application. He points out that video e-mail is not intrusive and that anyone sending video e-mail has control over how they appear in the video. He adds that it's easier technologically to deliver a good video e-mail experience.

Herrick says that it's important for companies that have video phone technology to offer something whose value does not depend on the network effect. He sees the biggest drawback to adoption of video phone technology as a simple catch-22: people don't want a video phone because nobody else has them, and nobody will want them until their friends have one.

Nevertheless, the company does expect to sell video phone and even video on demand technology. That's because it has good technology and because the demand will arrive. Herrick claims.

The company's been in the IP video business for some time. "The company was founded as Globalstream in 1999," explains Herrick. "We have a detailed knowledge of compression because we started out doing high end video editing for the broadband industry."

Now that there's a retail opportunity, the company's jumping on it and embracing ISPs as channel partners. Initially, the company was hoping to make money from license fees, charging ISPs based on their total number of subscribers. That changed at the NCTA conference in New Orleans in May, 2004.

"Small ISPs came up to our booth and asked about pricing. We'd customized a lot for Comcast, but now we saw the need for a turnkey solution directed at smaller broadband providers, which we call Videomail Express.

Pricing and availability
The Videomail Express product is available now for an up front license fee of $5,000 plus $0.10 per subscriber per month.

A more fully customized product, integrated with videomail, is available to larger ISPs for an undisclosed per subscriber fee.

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