A young company in Chantilly, Va., is on the frontier of the emerging videoconferencing market that analysts predict will hit $3.2 billion by 2001.
Objective Communications Inc., which had an $11.5 million initial public offering in April, has developed a product called VidModem that delivers two-way, multiparty videoconferencing and one-way broadcast television to a desktop or a conference room through an already established telephone line.
The company's patented technology also will permit users to retrieve stored videoclips from a server. What's more, VidModem will enable users to use all three applications on the desktop simultaneously.
The three-year-old company plans to launch the product later this year through partnerships with integrators, resellers, long distance carriers and equipment manufacturers.
"If you have a phone on your desk, you are ready for this," said Michael Lee, director of sales for Objective Communications. "This is the Holy Grail of video communications."
Analysts are expecting the videoconferencing market to explode in the next two years. An analyst with Forward Concepts, a market research firm in Tempe, Ariz., has projected that the U.S. market, valued at $227 million in 1996, will double in 1997.
Objective Communications plans to penetrate the market through partnerships with companies like Bell Atlantic Corp. in Philadelphia; Electronic Data Systems Corp. of Plano, Texas; Ernst & Young LLP, based in New York; Washington-based MCI Communications Corp.; and Sprint Corp. in Kansas City, Mo.
Formal announcements of partnerships will not be made until the product is released, company officials said. However, some of these companies are planning to use the technology in their own offices, said Frank Gore, vice president of sales and strategic alliances for Objective Communications.
For example, Big Six accounting firm Ernst & Young plans to use the product to train its accountants at their desktops instead of sending them to different parts of the country. Other markets for the product include Fortune 500 companies, educational institutions, financial organizations and telemedicine applications, said Gore, who expects to see profits rolling in by early 1998.
Analysts and company officials said the delivery of video over existing telephone wires is a different approach in the videoconferencing market.
"What they have is very compelling," said Traver Kennedy, director of wide area networks for Aberdeen Group, a market research firm in Boston. "They are one of the few companies doing desktop videoconferencing over phone lines."
Company executives said their technology allows companies to migrate to videoconferencing without upgrading their telecommunications infrastructure.
"Objective Communications is unique in that they are using the pair of wires that house a company's phone lines," said Christine Perey, an analyst with Perey Communications and Consulting in Placerville, Calif. "No other company is doing it that way."
Most other videoconferencing providers use a company's existing local area network to transmit video data, said analysts.
Research and development on the VidModem product has been under way since the company was established in September 1993. The company has been funded through $4.5 million from venture capitalists and its board of directors.