Imagine what happens when things are free. (Part 2): A closer look at video conferencing

Last week, I wrote about the effect of “free” and what changes it causes in a market. Today, I’ll explore this economic trend is transforming the video conferencing industry.

The opportunity

As the price of technology decreases, the opportunity to use those technologies increases. As such, we can expect the mass deployment of visual communications technology in the 40 – 50 million meeting rooms globally. No one doubts the power of visual collaboration when it comes to increasing productivity and improving business outcomes. But until now, the barrier to entry was simply too high.

Today, with free/freemium services available like Google Hangouts, Apple FaceTime, Skype, combined with the introduction of affordable endpoints such as Logitech ConferenceCam CONNECT Connect, or Logitech GROUP, companies can implement video conferencing for less than a the cost of a single chair in the meeting room. As such, the decision of whether or not to use video has moved beyond being price-related.


At first there are many, and then there are few

As is common with a new market, lots of new entrants have poured into the video market. This concept in new markets is often referred to as a Cambrian Moment in Economics. Over time, even with the reduction of cost as a constraint, a few major players will emerge. The network effect becomes overwhelming. It simply becomes easier for new customers to adopt the same solution as their suppliers and customers. Over time the market settles down, but in the video conferencing space there are plenty of fascinating and new service offerings being tried. It will certainly be interesting to see who the few are as we move through this market transformation.

And as the cost of  services drop, so must the hardware if the solutions are to scale. The Internet has made the cost and friction of supplying software and services incredibly low, but to be successful solutions also need to have hardware components that can be delivered scalably at low cost around the globe. This is a game-changer in our industry, because it’s much harder for businesses with a history of sales-led, high-cost manufacturing models to move into the world of mass deployed technology.

From push to pull

As prices fall and video technology proliferates, the network effect becomes ever more powerful. As small and mid-sized meeting rooms, including huddle rooms, and home-based workers become equipped with more efficient business tools, it becomes ever more imperative for others to invest to keep up.

For most of its history, video conferencing has been a push sale. The industry was a small group convincing clients to invest as a competitive advantage. As the market rapidly grows, I see us moving from a push, to a pull sale. Rather than being an add-on, customers are beginning to demand video and view often view it as a competitive advantage.

The changing landscape of work

With all this new technology in the hands of millions of workers globally, the very reason for large offices begins to be called into question. With groups being able to work globally, with distance becoming irrelevant, we will see a renaissance of the artisan working from home. Or small groups deciding to work together on projects. This would be fantastic news for the environment, our cities creaking infrastructures, and the mental health of the millions now forced to commute to a distant office. I recently explored the work-from-home dynamic.

Of course, these are just a handful of the effects that low cost video conferencing technologies may have. I’m sure there are many more, and I would be fascinated to hear your thoughts. And if you’re interested in reading more on our changing economics, here are a couple reading recommendations. Enjoy!

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