Power Tool

Videoconferencing that works

When Gus Otto calls videoconferencing a lifesaver, he speaks from personal experience.

The senior systems analyst at Caterpillar figures he might not be here today or, at the very least, might not be walking if surgeons had not used videoconferencing and a high-tech robot to remove bone chips from his back after a deadly accident.

Today, as the leader of Caterpillars videoconferencing department, Otto, 52, tells people about the new world of multimedia unfolding before his eyes every day. With a satellite-based system to link its far-flung enterprises, the Peoria, Ill.-based company uses videoconferencing for business meetings, training, technical conferences and troubleshooting.

"If I had my way in life, every PC in the world would have multimedia capability and you would be able to call anywhere in the world and have voice, video and data going through a normal phone line" he says. "In the next two to three years people will be asking why you have that ancient thing called a telephone sitting on your desk."

Learning From Experience

A collision near Springfield, Ill., 11 years ago claimed the life of a young mother of four who ran a stop sign at high speed, plowing into Ottos van. With his back broken and chest crushed, Ottos survival also looked doubtful; his chances of walking again were even more bleak.

With only a 30 percent chance of survival, Otto gave doctors at the Southern Illinois University School of Medicine permission to program the robotic arm to perform the surgery. Through videoconferencing, surgeons in Springfield were able to consult with top experts around the world during the procedure.

At Caterpillar, the worlds largest manufacturer of construction and mining equipment plows new ground with the PictureTel 900-Series equipment. While Caterpillar still operates videoconference rooms around the world, desktop systems are proliferating as workers share documents and face-time. Executives and technicians on the road can even join conferences via their laptops.

Arising from a collaboration between Andover, Mass.-based PictureTel and chipmaker Intel, the 900-Series brings the price of a complete enterprise-level videoconferencing system down to $10,000 to $15,000, while boosting the quality of audio to four times better than the standard cell phone. Poor audio has historically been the Achilles heel of most systems, Otto says.

With higher quality of service over Internet Protocol from the major carriers, companies such as Caterpillar can bypass expensive Integrated Services Digital Network lines, cutting costs by as much as two-thirds, Otto says.

As the price of the PictureTel equipment continues to fall, new customers among small and midsize businesses are expected to surface. The company plans to introduce a system in the $5,000 to $10,000 range next month.

"Were delivering a next-generation tool, where videoconferencing is just one application," says Ned Semonite, vice president for product development at PictureTel. "The other is sharing information, whether youre on a call or not. The Intel processor is not only a PC processor, but four very powerful DSPs [digital signal processors]."

Unlike the "talking heads" systems of the past, the new equipment allows high-resolution images to be shared in remote locations, while cameras automatically pan the room and focus on each person speaking. Opening a videoconference is as simple as clicking on the persons name in a directory.

While PictureTel expects healthy demand for systems in the lower price range, the company is pruning growth expectations because of the technology slump. Amid its own miscues and relentless pressure from the financial markets, PictureTel has seen its shares tumble to the penny-stock level.

Meanwhile, rival equipment maker Polycom actually saw profits increase last year. Polycom is selling its ViewStation systems for less than $600. For companies that want a more sophisticated system, Polycom offers a full catalog of technology.

At The Dow Chemical Co. in Midland, Mich., company executives are using videoconferencing to close ranks with employees at newly acquired Union Carbide. With 50,000 employees worldwide, Dow Chemical racked up 9,000 hours of videoconferencing, not only to keep executives off airplanes, but to solve customer problems.

"The real value of videoconferencing is not just in avoiding the cost of travel — its creating a competitive advantage," says Dan Denardo, global leader of e-publishing and videoconferencing at Dow Chemical.

While videoconferencing might summon images of blurry, faltering video, Denardo says the clarity is quite remarkable these days. In fact, through videoconferencing, scientists at Dow Chemical headquarters were able to identify a problem with a customers plastic-extrusion process that was not apparent to the naked eye.

Denardo quotes a videoconferencing executive at a major pharmaceutical firm who tried to quantify the value of his companys system: "He figured the average number of people in a video multipoint call is six, and theyre from three different countries. Obviously, it costs those folks a lot to travel, so they come up with a $30,000 savings on that meeting. If they can bring a product to market one day sooner, its worth $1 million a day to them."

At Bristol-Myers Squibb, meanwhile, use of videoconferencing has increased since the pharmaceutical firm adopted Polycoms ViewStation at 13 research sites. Because the low-cost system is so easy to use, Bristol-Myers Squibb no longer needs videocommunication specialists at each location to launch meetings.

But for Caterpillars Otto, the value of new technology transcends the typical cost-benefits analysis. "People say, Whats the business case for it? Why do we need a business case for everything in the world? How much more important can a business decision be if it saves a life?"