Update: As this article was going to press, Vidyo announced that a solution leveraging the VidyoWorks Platform is in place at the Department of Defense and at capacity to support about half a billion minutes a year. Obviously, this is a big part of the story, and will be addressed in an addendum at the end of the article.
A number of factors have converged which could dramatically change the perception and position of Vidyo in the visual collaboration space.
Vidyo started in this industry as a bit of an outsider. At a time when the industry was focused on hardware sales and traditional H.264 interop, they hit the scene with their software based videoconferencing platform based on H.264 SVC. Without getting too deep into the weeds, SVC is an extension of the H.264 protocol which allows for business quality video over the internet. Whereas traditional H.264 falls apart under typical internet packet loss conditions, SVC splits the video signal into a number of layers, protecting the “base layer” by dropping higher level “enhancement layers” under poor network conditions. The result is that when the network gets bad, rather than losing your call, you simply lose a little quality (i.e. your resolution and/or frame rate will temporarily drop a bit).
Vidyo, under the leadership of co-founder Ofer Shapiro, really had two missions. One was obviously to build Vidyo as a business, the other was to convince the world (including its competitors) that SVC was the right methodology for transmitting video over the internet. Ofer’s acumen as a CEO resulted in success in both missions. As a business, Vidyo has grown tremendously, year after year, during Ofer’s 10 years as CEO. They are a private company, so revenue/profit data is not available, but they did let me know that 2014 was a banner year for them on that front. While we may not know the revenue numbers, we can also measure their growth by customers and usage. For example, they recently announced that one of their partners hosted over 70 million minutes of video using Vidyo’s platform. When you consider that this is just one of over 50 service provider partners, it becomes evident that Vidyo is one of the top video-as-a-service platforms on the market today. This is particularly impressive considering the massive explosion of successful competitors in the market over the last few years.
In terms of the second mission, making SVC the new standard, Ofer was beyond successful. Almost all of Vidyo’s traditional competitors, as well as many new offerings in the space, use or support SVC to some extent. While some may initially think this weakens Vidyo’s place in the market, it in fact strengthens it. Vidyo hasn’t lost a differentiator, because not all SVC is the same. They hold over 80 patents, which set their implementation of SVC apart from the rest of the crowd. In other words, it is now an SVC world, and Vidyo is the undisputed leader of SVC technology. The future of SVC is also assured, as the Vidyo team is working closely with both the H.265 and VP9 development teams. So in the future, whether you are making traditional video calls from a meeting room system, or a WebRTC call from your browser, you will be enjoying SVC, potentially supported in the background by the Vidyo platform.
That brings us to today, where a few factors have converged to make this a crucial year for Vidyo as a company. In terms of technology, the world has caught up and is now ready to enjoy the benefits of scalable video over IP. While Vidyo’s true power is the ability to scale to massive deployments, supporting desktop and meeting room systems alike, the market wasn’t ready for this type of environment until recent years. Until then, business video was strictly a boardroom commodity, but Vidyo was ready and waiting for the desktop set to adopt. Now, from a social perspective, we are ready. People are far more comfortable with the concept of business video, and starting to adopt it for their everyday communications outside of the boardroom.
Not only are we, as people, ready for what Vidyo has to offer, but our infrastructure is ready as well. We have more than enough bandwidth to support the proliferation of video, and our common desktops and laptops are more than powerful enough to support it. It is as if Vidyo was trying to sell car engines in the wilderness and woke up one day to find that all the roads have been paved, and everyone had engine-less cars sitting in their driveways. In other words, the world is ready to buy what Vidyo is selling. With the Internet of Things rapidly approaching, and new uses for video (such as contact centers) being developed every day, there will be no shortage of applications for Vidyo’s platform.
In terms of the business, they have matured from a technology company in a product based market, to a leading platform provider in a service based market. Many industry analysts have criticized Vidyo over the years for being a round peg of technology, trying to fit into the square hole of VC sales. Vidyo is no longer the odd duck of the VC industry, they are now a perfect fit, with a top of the line video platform with name recognition and reputation, as service providers are looking to add video to their offerings.
As a part of this maturation and transition, Vidyo is shifting leadership roles. Ofer Shapiro will take the role of Vice Chairman, and will remain active in Vidyo leadership. Stepping into the CEO role is Eran Westman, previously their Chief Revenue Officer. Eran is the right man for the job for a number of reasons. First of all, he is a revenue focused businessman. With Vidyo’s primary goal of making SVC a standard accomplished, the only thing left on the agenda is maximizing revenue and profitability just as any other business. Eran, of course, can speak to the technology, but his expertise is business leadership and managing company growth. Vidyo is a big company now, poised for significant continuing growth, and Eran’s decades of experience growing companies and managing hundreds of people will certainly be needed. This is really a big win for Vidyo, as Eran’s year as CRO for Vidyo has given him the opportunity to learn the ins and outs of the company, as well as a chance to prove how his leadership chops can positively effect Vidyo’s growth (my understanding is that Eran had a lot to do with 2014 being such a strong year for Vidyo). So as Ofer steps up to Vice-Chairman, Vidyo is not forced to pull in an outsider, or to promote someone from inside who would have to grow into the position.
With new leadership, and a market that is finally ready to fully utilize the its platform to its true potential, Vidyo is poised to make 2015 a significant year in the company’s history. I look forward to checking out their latest offerings at the upcoming Enterprise Connect show, and to watching how things continue to develop throughout the year.
Addendum: The recent announcement regarding the Vidyo implementation at the Department of Defense confirms some of the analysis above. It is hard to ask for more confirmation that an article titled “Big Expectations for Vidyo in 2015” is on the mark if a Vidyo installation supporting half a billion minutes is announced before I can even go to press. Looks like my expectations have been met, and it is only March.
In all seriousness, this announcement shows that Vidyo is no longer the outsider trying to prove itself, but a reputable leader in the software VC industry, and capable of pulling in and supporting mainstream establishment customers on massive scale. The DoD is about as tough a customer as you can get when it comes to secure communications solutions. With that in mind, this deal should help make Vidyo an attractive choice for other applications with security concerns (banking, healthcare, etc.) in the coming Internet of Things.