Disclosure: Many of the vendors mentioned are clients of the author.
I’ve been covering videoconferencing long enough to watch three significant efforts in the 1980s, ‘90s, and 2000s fail spectacularly for pretty much the same two reasons: proprietary hardware and software and too little interoperability. You wouldn’t buy a cell phone from that only connected to another phone from the same vendor, right? Yet, it is not unusual for the hardware and software from one videoconferencing vendor to only work with hardware from the same vendor.
Though it seems like this market is stuck in the last century, times are changing. Lately, I’ve been working with hardware from vendors like Poly that work with both Zoom and Microsoft Teams. (Teams appears to be making moves towards Zoom, which is consistent with its current effort to embrace interoperability and open source.
Microsoft is the poster child for showing the benefits, in general, of shifting from an old traditional propriety approach to the new — and far more interesting — collaborative and cooperative world of today. It’s doing well and seems to not be at risk of any antitrust issues surrounding dominant proprietary vendors like Apple.
Let’s talk about the slow, but necessary, evolution of collaboration technology that will eventually redefine the collaborative space.
The attraction of a proprietary approach
Using a proprietary model has its advantages. You can better assure quality because you own or control all the elements. You don’t have to worry as much about competitive pricing because your customers have to buy components and software from you. So, as Apple often demonstrates, you can raise prices to increase revenue and profit. This approach is easier than if you have to set a price in a competitive market where prices are often fluid.
You don’t have to worry as much about customer churn because the cost of leaving your closed platform is high. And you don’t have to focus intensely on customer satisfaction because, once again, your customer can’t quickly move. You can see why this model was once favored by most tech firms and is still favored by companies like Apple and Oracle. It feels like, at least for a while, you can simply mine your customers for money.
The big problem with proprietary
The issue, particularly now, is that it is far harder to maintain that customer lock. Among other reasons, the increasing use of analytics to find and reduce excess operating costs is making customers aware when they’re being overcharged. Once a critical mass of customers realizes that, and a competitor offers up an acceptable way to migrate to a more open architecture, the market will likely pivot.
This proprietary approach is particularly problematic in communications areas like telephony and videoconferencing; buyers need solutions that are open and play well with others because they need to collaborate with peers and customers, many of whom are now remote.
During the pandemic, this has become even more obvious because these systems may not work well together even in the same home. You’ve got one system, your spouse has another and the kids’ school has still another. Home hardware, in particular, has to work with everyone’s collaborative solution; otherwise, it will have to be replicated with other hardware that works with the other systems. That can dramatically raise the cost of provisioning and supporting employees while lowering their collaboration potential.
The long-term success, or failure, of this current videoconferencing market expansion will depend heavily on how widely interoperability and hardware choices are expanded and supported.
A coming solution?
The No. 1 goal of any communications product, be it a smartphone or a video offering, is to communicate successfully. It can’t do that well if it only works with one vendor’s products.
That’s one of the reasons I was so bullish about Nvidia’s Omniverse last week. It provides a universal framework where multiple vendors and multiple hardware solutions could eventually function and it suggests a future path. It represents a decoupling of hardware and service, much as we do with other cloud solutions today, allowing customers to choose the best hardware for the job knowing it will simply work. This relatively open approach is how the smartphone market works; carriers provide the connectivity, and almost any phone will work with almost any carrier.
Ironically, with PCs, we’re almost there. Your PC will work with virtually any central videoconferencing back end. But the front end, the software, gets in the way.
Eventually, companies like Nvidia will change this dynamic and take over the market, leaving behind the proprietary folks much like what happened to the old IBM and old AT&T. With the industry focus on interoperability I can’t understand why some companies don’t see this threat and pivot to it before it does them critical harm.
Wrapping up: Interoperability is king
Interoperability remains the main priority of any communications product, and yet it’s the most significant unmet requirement from videoconferencing vendors. How the existing players in the market don’t get this, I’ll never understand.
The question I have is whether we’ll get to the right solution during this 10-year cycle or will it be a repeat of the failures we’ve seen for the last three cycles. Remember that saying, “Those that don’t learn from the past are destined to repeat it?” We don’t seem to be learning, and our collective, collaborative futures may depend on eventually getting this right.