New iPhone and High Gas Prices Could Drive Visual Networking

Wednesday Jun 11th 2008 by Rob Enderle
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Tough new economic realities are working to promote Web-based visual networking. But the disappointing iPhone 2.0 might not be the device to drive this trend.

Most of us have likely been thinking of two things this last week: gas prices that are quickly reaching ridiculous levels and Apple’s new iPhone, which likely will change the way many of us communicate.

The gas prices have a lot of companies reconsidering how they do business and focusing on things like Telepresence as a way to avoid the massively increasing travel costs. The iPhone and recently released competitors like the HTC Touch Diamond/Pro, RIM Bold/Thunder, and Samsung’s Instinct herald an era when more people will be creating digital video and posting it on social networking sites. They’ll use their own pictures and video for employee training, and to communicate ideas to co-workers.

Even though the new iPhone apparently missed targets (we’ll get to that in a moment) its video capability will undoubtedly dramatically increase the video content on the Web while getting a lot of folks who don’t now do video doing it. If you like privacy you are kind of screwed, but you probably already knew that.

This puts pressure on both consumers and businesses to reconsider their networking needs and this reconsideration is birthing a network technology trend called Visual Networking. Let’s chat about what Visual Networking is and how it will be used to increase productivity and decrease operating expenses.

Visual Networking

Visual Networking is re-architecting a network to enable an adequate amount of visual information while assuring that the resulting latency is acceptable.

This suggests not only a focus on bandwidth but on network traffic management. Much of this is done automatically, so that the distributed users get the quality of service they need to do a specific task. The reason for a tight focus on latency is the increase in Telepresence applications, basically high end High Definition video conferencing.

This probably shows an evolution of the Internet, which started out as primarily a way people got access to text-based information and static pictures, to a place that increasingly is hosting TV shows, movies, and personal video. This last, mostly surrounding properties like YouTube initially, and Facebook today, is weaving in a social aspect to all of this – which is also making it into business.

With the recent announcement that an interactive real time 3D modeling technology (for Star Trek fans, think Holodeck) actually works this is just the start of what is likely to be an increasingly important technology.

Business Drivers to Visual Networking

Adoption often follows availability by a significant period of time as people become comfortable with the changes. In the case of video the trend to put video on the Web either by individuals or companies goes back to the beginning of the decade when the first digital video capture devices first started to sell in high volumes to consumers.

But the biggest driver is likely the increasing cost of gasoline, which is shifting people to seriously think about video conferencing as a way to get out of their cars and planes and recover some of the money they are losing on at the pump.

recent announcement It’s interesting to note that at TechEd (where I’m writing this) I met with Pella’s CIO and he indicated that they were aggressively moving to implement Microsoft’s OCS, had already put in place a Cisco VOIP phone system and were deploying Telepresence solutions broadly to get employees out of cars and planes to conserve energy. This has been a very common theme of late, and while he didn’t mention Visual Networking by name that is exactly what he was doing.

The Disappointing New iPhone

I started writing this before the iPhone was announced and was expecting to have my socks knocked off but have to admit I was disappointed. I typically am amazed at how well Apple orchestrates these things but this time the phone wasn’t ready, key services will follow the phone to market by weeks in one case and months in another, and the expected price reduction is a smoke and mirrors effort moving money from the initial purchase and making the monthly service costs even higher.

At a time when energy prices are going up I have a hard time believing that that many potential customers for this phone will want to increase their monthly expenses and may instead be looking at reducing the monthly expenses they already have. Steve Jobs was right the phone needed to be less expensive but he didn’t actually do that he just put the charges in different buckets and we may actually find the result is a more expensive phone when the new service charges are disclosed.

This is a PT Barnum-like pricing change (“a fool born every moment” was his famous quote) and I’m not sure it is wise to treat his customers like fools.

In addition, a lot of the attractiveness of the original iPhone was due to its high price, which was relatively exclusive. Now the $200 entry price makes it appear much less so; years ago there was a study that concluded that if you dropped the price of a product below were people thought it should be priced you might actually lose customers.

This suggests there may be a double risk, on one hand folks that do the math may conclude they can’t afford the real price, and the folks who don’t may feel the device is too common and not desirable anymore. We add to this the delays for the core features until late July for Mobile Me and September for the promised enterprise support and you wonder if Apple didn’t screw up with this one.

In short, the iPhone may not be the driver for Visual Networking that I initially thought it might be, and we’ll need to watch the initial sales volumes closely.

Wrapping Up

Whether the iPhone 2.0 is a success or not, people are increasingly using and sharing videos and the cost of gas is creating a massive move towards Telepresence and Video Conferencing products. Some companies I’m talking with are actually planning on deploying this capability widely on the desktop. This represents one of the most massive upgrades to world wide networking capability that I have ever seen and it is well worth keeping an eye on.

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