Optimism about telepresence is high at Cisco, but channel will be slow to grow

Cisco is betting big on the sales potential of its telepresence technology, but the logistical, partnership and customer-satisfaction requirements mean its reseller network will grow slowly.

Telepresence networks and applications will become a major part of the business of Cisco Systems Inc. and its channel partners, according to CEO John Chambers, who called it one of several technologies with potential to generate more than $10 billion in revenue within a few years.

But, despite Chambers' prediction that the technology will spread quickly, Cisco channel executives said the growth of telepresence integrators will be relatively slow.

"We've been very deliberate about the way we are rolling it out," according to Edison Peres, vice president and go-to-market officer for worldwide channels at Cisco, who says 24 partners are either selling the systems already or are preparing to do so. "We're letting each of our arena managers decide how fast we need to bring partners on board, though we're starting Phase II of that."

Part of the holdup is the technical requirement; only value added resellers (VARs) certified to implement Cisco advanced technologies are even eligible to pursue certification for telepresence.

Most, however, are concerned about the quality of the delivery and logistics, according to Chuck Robbins, vice president of U.S. channels. Most telepresence customers so far have been among the Global 500 -- most of which Cisco has worked with directly, rather than through the channel.

Cisco's policy is to hand off those deals to channel partners, Peres said. Even Cisco's internal telepresence installations are being handled by VARs, he said.

But each sale means signing up two or more of the very small number of partners certified to sell the systems, Robbins said.

"By definition if you're setting up a system between here and Hong Kong, you're working with a Hong Kong partner," he said. "There's not always a one-to-one correlation of technical skills or presence; we're having to hand-hold this one pretty closely."

That's an issue, but not a disastrous one, according to Cyndi Privett, vice president of research at Viewpoint Research Inc. in Scotts Valley, Calif.

"Telepresence is definitely a double-edged sword," Privett said. "Restricting [certification] to only advanced technology VARs definitely keeps the numbers down. On the other hand, Cisco has been very good about focusing on one set of resellers and bringing them up to speed on a new technology while also raising the rest of the market.

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"In this case Cisco has provided a very clear set of stepping stones to say that if you want to sell this, here's how to get to where you can do it," she said. "It's not going to be a huge rush; it will probably be three to five years before you see a lot of partners selling telepresence."

"There is a lot of cross-partner partner-management in this," Robbins said. "But we have to be careful that we don't curtail the growth of this opportunity because we're so concerned about the customer experience," Robbins said.

Peres and Robbins acknowledge that the growth of telepresence VARs will be slower than would be the case if telepresence were a less demanding technology. Both expect new applications of the technology to sell as many systems as the ability to eliminate travel -- the traditional raison d'etre for teleconferencing.

Vertical-market applications such as the remote-medicine setup one client is considering would drive some sales, Robbins said. The setup, designed to reduce healthcare costs for client companies, would let an employee go into a private room with a remote-operated blood-pressure cuff and other health-data telemetry equipment and be examined by high-definition telepresence by a distant specialist.

Another, suggested to Peres by a client in a hotel-and-restaurant chain, would allow two people to dine together in physically distant restaurants by having similar meals served at similar tables, while interacting via high-definition TV.

VARs in emerging markets have already come up with several such applications, especially among oil and gas companies, which tend to have pumping rigs and other installations spread over wide geographic areas, but require close communications, according to Osvaldo Bianchi, senior director, emerging business channels for Cisco. One very effective application is a remote-monitoring setup that lets a client company keep a literal eye on a remote oil pumping rig via telepresence.

"Even an hour offline is a very serious thing there," Bianchi said. "So this is a very useful capability."

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