CLI Jumps on Telemedicine Market

The videoconferencing leader in the federal market, CLI will have to spend more on R&ampD and sales to keep up with commercial competitors

Compression Labs Inc. last month participated in the nation's largest telemedicine project, supplying its high-end Radiance videoconferencing systems.

Sponsored by the University of Texas Medical Branch at Galveston, the interactive diagnosis program this year will treat about 2,500 patients, more than any other effort thus far in the United States. CLI's inclusion in the project reflects the company's growing interest and successful penetration into the growing telemedicine market. That makes Henry Clifton, vice president of CLI's federal systems region, extremely optimistic.

The videoconferencing leader in the federal market, CLI sells its products and services through some of the government's biggest contracts. The company teamed with Sprint on the FTS 2000 governmentwide network and with AT&T on the Pentagon's Defense Commercial Telecommunications Network. Bell Atlantic also offers CLI equipment on the General Services Administration schedule.

Although CLI has its own GSA Schedule, the company also works with a variety of firms ranging from 8(a) companies to small, disadvantaged businesses and big systems integrators. Some of its partners include Signal Communications, York Telecom, I-Net Inc. and Electronic Data Systems Corp.

For Clifton, a former head of Apple Computer's federal operations, the company's telemedicine involvement means a new application niche to exploit in the federal market. The Defense Department has been a leading proponent of using infotech to treat patients in the battlefield during the last several years, with extensive work being done in Fort Detrick, Md.

Despite the latest application of CLI equipment in the medical community, government organizations continue to use CLI most heavily for videoconferencing. Federal agencies, under pressure to reduce their budgets, have had to cut travel expenses, making interactive electronic meetings a less costly alternative.

Earlier this year, CLI responded to the market need for a more economical system than the company's Radiance product line. The San Jose, Calif., enterprise introduced its eclipse models, which can operate at transmission speeds of up to 384 kilobits per second and give users the ability to control the system's camera for better viewing.

Sarah Dickinson, senior analyst at Personal Technology Research in Waltham, Mass., said, "This is a very strong offering by CLI. With the introduction of the eclipse Model 8200 and 8300, CLI offers a truly comprehensive family of videoconferencing products." The new product line rounds out the company's offerings, from the high-end Radiance machines to the mid- to low-range eclipse and to its Cameo or Intel Proshare desktop system.

From the investment community's standpoint, CLI must keep rolling out new products to stay in the race with PictureTel Corp. and VTEL Corp., key competitors, especially in the low-bandwidth videoconferencing market. Randy Yuen, vice president at Oppenheimer & Co. Inc., said CLI had not invested enough in its sales efforts and research and development during the last few years. "Meanwhile, you had PictureTel and VTEL ramping up," he pointed out.

CLI's revenues grew from $141.3 million in 1993 to $157 million last year. On the other hand, Picturetel sales reached $255 million in 1994, a 45 percent increase from the previous year. Although CLI has reorganized and invested more heavily into its sales force, "it will take some time to stabilize, but hopefully, CLI's on the right track," Yuen said.

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