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Teleconferencing to the Rescue
Posted Mar 1, 2002 Print Version     Page 1of 1

March 2002 | While no decent person wants to profit from the misfortune of others, sometimes disasters have ancillary after-effects that benefit certain people in certain positions. Some decent people in the computer and online industries, for example, are discovering that even a cloud as dark and gloomy as the one that hangs over Ground Zero in Manhattan has a silver lining. The terrible destruction of September 11 created a demand for computer products and services, spurring activity in several market segments including consulting, network infrastructure sales and services, data recovery, security, and videoconferencing. Prior to September 11, all these industries were hurting—victims of economic recession.

On September 11, nearly 26.5 million square feet of Manhattan office space was destroyed or damaged. And when the Trade towers came down a lot of company computer equipment and infrastructure came with them. Once the initial shock abated, many companies realized they needed to quickly find new office space and new equipment to fill and connect those offices. They needed new PCs, new networks, and new software, and to hire consultants, technicians, and service providers. Many computer and high-tech companies, such as IBM Corp., SunGard Data Systems, Comdisco, and Counterpane Internet Security rushed in to fill the void and to help rebuild. In doing so, they've earned money that has helped prop up their sagging bottom lines.

And the response to the terrorist attack has extended far beyond New York and Washington. One indicator of corporate America's willingness to spend money to fight and prevent terrorism is the results of a survey of 225 chief technology officers conducted by investment bank Morgan Stanley. As reported by Reuters in October, this survey showed that 19 percent of the polled CTOs said they had plans to make big technology purchases in response to the terrorist attack. Most of this increased spending would go toward disaster recovery services, network security, and backup software.

But among the computer/online/high-tech markets, the biggest beneficiary will probably be the teleconferencing industry. The first week following September 11 stock prices for conferencing companies climbed almost as much as those for the airlines fell. WebEx (a provider of Internet-based communication services) was up 24 percent, and shares for Polycom, the world's largest videoconferencing company, rose 33 percent. ACT Teleconferencing, WireOne Technologies, and MCSi also posted rare gains. And Raindance, a company that provides audio and Web conferencing services, reported in a press release that its business was up 30 percent.

The primary reason for a teleconferencing's newfound popularity is, of course, a widespread fear of flying. "American air travel will become much more complicated," says financial consultant Geoff Bobroff, president of Bobroff Consulting of East Greenwich, Rhode Island, a mutual fund consulting firm. "Businesses will need to look for alternatives. For organizations with global communications needs, it makes tremendous sense to use teleconferencing and any other technological tools at their disposal to quickly return to business as usual."

In the hours immediately following the tragedy, Ken Hayward, CEO of V-SPAN, says he saw a 30 to 50 percent increase in demand for teleconferencing solutions. V-SPAN is a provider of video-, audio-, Webconferencing, and streaming media services. "American businesspeople have shown remarkable resiliency," Hayward says. "Almost immediately, they began to use a host of conferencing solutions to reach out to their employees domestically and internationally. Throughout this tragedy, they have done their best to not lose a step."

Hayward, who saw similar use of technology during the Gulf War in 1991, predicts that demands for teleconferencing and similar solutions to connect worldwide corporate offices may spike as much as 100 percent over previous levels in the near term.

News like this from the financial front has sent market analysts like Andrew Davis, managing partner at Wainhouse Research, scrambling to revise their market projections. Prior to September 11, Wainhouse had been predicting a negative growth rate for most of the videoconferencing market.

Writing in Wainhouse's online newsletter in October, Davis expressed his belief that the terrorist attack would open people's eyes to the benefits of conferencing. "People who are forced to use conferencing as a replacement for travel will find the experience friendly and high quality," he wrote. The result will be not merely a temporary boost, he continued, but "a long-term benefit to the conferencing industry."

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