Focused Solution : Cameras Allow PCs to Get Really Personal
A typical high-tech dreamer envisions a personal computer on every desktop. At Workstation Technologies Inc., there’s a twist: The company wants to see its video cameras atop those PCs.
The company, which makes computer components, will discover soon enough whether customers share that dream. On Monday, it introduced a black-and-white video camera for a system that desktop computer owners can use to see each other in long-distance video conferences.
Based on multimedia technology--the melding of PCs, sound and video systems--the system takes video signals and translates them into data that computers can process and display on monitors. That visual data can then be squished into smaller encoded bits and transmitted over phone lines or computer networks for broadcast on other monitors.
“Other companies went into the multimedia market with disastrous results because they were ahead of the time,” said Chris Miner, president of Workstation Technologies. “We have a focused solution that we will provide to established companies.”
The cameras range in price from $160 to $225, compared with typical camcorders that sell for about $800. Unlike camcorders, Workstation Technologies cameras are specially designed for use with computers.
The cameras are part of a $3,900 video conference system being marketed by Northern Telecom Ltd., Canada’s telecommunications giant. Workstation Technologies plans to ship a color camera later this year.
The company admits that the camera isn’t going to be a must-have item for most corporate computer users, partly because of the relatively high cost of the other equipment necessary for a high-quality video conference system. The camera can transmit images that approach broadcast quality when connected by a computer network. But on regular phone lines, the motion is choppy, sort of like crude, slow-motion photography.
Normal phone lines can transmit about 7,000 bytes of data a second, but a typical camera image consists of 10,000 bytes that must be transmitted at least 15 times a second to approach standard video quality. Only when motion pictures can be broadcast at true television quality, or 30 times a second, will the technology have a mass market appeal, analysts say.
“Desktop conference equipment is in the early stages of adoption,” said Mark Lowenstein, associate director at the Yankee Group, a Boston market researcher. “Users will not tolerate significant lapses in picture quality. The market may not evolve into the next stage for a couple of years.”
Even so, says Ashkor Jain, Workstation executive vice president, the camera technology has knocked down the price of video conference equipment and will prove useful for business people who want long-distance visual interaction. Large corporations are accustomed to paying as much as $50,000 for video conference equipment that captures group discussions and up to $15,000 for desktop conference systems, said Steven Levy, analyst at Hambrecht & Quist Inc., an investment bank in New York.
“People can work together on the same computer document from far away, and they can see facial expressions that add to the communication,” Jain said.
The camera is the latest multimedia product from a behind-the-scenes, 4-year-old company that specializes in creating “technology building blocks” for big computer and consumer electronics makers.
Jain and Klaus Allmendinger, a second executive vice president, worked together in the former Apple Products Division of AST Research Inc. in Irvine. When AST decided to exit the circuit board manufacturing business in favor of making computer systems, it decided to sell off the Apple division.
Jain and Allmendinger made an abortive attempt to acquire the division, which was eventually sold to Orange Micro Inc. in Anaheim. Despite AST’s decision, both men were convinced that digital video technology had a bright future. They got together with Miner, a former school colleague of Jain’s and former chief financial officer for Technology Marketing Inc., an Irvine electronics engineering company.
The three founded Workstation Technologies in May, 1989, using about $250,000 of their own money. They have yet to tap into venture capital or public sources.
“We didn’t start with one product in mind because the market wasn’t ready,” Miner said. “Other companies have tried to push the multimedia market and failed. Our plan was to stay small and wait for the opportunities.”
Rather than sell its technology to consumers, the company marketed components to large computer manufacturers. The first products were digitizers, which convert video and audio signals from analog format to the digital format that computers use. Such products enable computers to run clips of videos and reproduce sound much like that of TV sets.
Later, in 1991, it landed a partnership to design and engineer components for Northern Telecom. Manufacturing is done by subcontractors. Workstation Technologies is negotiating with several other customers for the camera, Jain said.
“Other companies like AST go for the established market,” Jain said. “We wanted to go for the leading technology.”
The rollout of a full range of multimedia products has enabled Workstation Technologies to grow from $1 million in sales in 1991 to $8 million last year. The privately held company says it is profitable, but it does not release earnings figures.
Jain estimates that the camera could account for 25% of a projected $20 million in sales for 1993. He expects the work force to grow from 30 now to 50 by year’s end.
Tom Yuen, former chief executive of AST, said that Workstation Technologies could be on the edge of much bigger opportunities if it can refine its technology.
“If they can reduce the size of the camera so that it can work in portable computers, then the potential becomes much bigger,” Yuen said.
Yet Miner and his co-founders are proceeding cautiously. The computer industry is littered with examples of companies that have tried to take advantage of the nascent multimedia market. Too often, the losers were systems for a generation of PCs that were too expensive and not powerful enough.
“Prices have gotten lower, but the biggest obstacle is cultural resistance, whether people will use two-way video systems,” analyst Levy said. “In a couple of years, the desktop conference market could grow to $200 million. That is not huge.”
Still, consumer electronics manufacturers like Sony Corp. and computer makers from IBM to Apple are banking on multimedia because of its promise and because computer processing power is getting cheaper and stronger.
The Yankee Group estimates that annual business and professional use of the multimedia market, which represents a $330-million slice of the computer industry now, could reach $1.1 billion by 1996. A third of that is expected to be directly related to desktop video conferencing.
Workstation Technologies isn’t the only company entering the market. PictureTel Corp. in Massachusetts and Compression Labs Inc. in San Jose have staked their claims in desktop conferencing. Compression Labs uses Sony cameras in its Cameo desktop conferencing product line. Sharp, Hitachi and Panasonic are also making video cameras for use with computers.
“The desktop conference product is a relatively small part of our business,” said William Berry, chief financial officer for the San Jose company.
Miner of Workstation Technologies thinks his company can sustain sales by introducing new products as the market develops. Jain credits the company’s survival to its ability to move fast, its small size and tightly coordinated engineering and manufacturing process, which cuts product development time.
“We often have prototypes ready in four months,” he said.
The company also reduces its risk by developing components in partnership with industry giants such as Northern Telecom, which in turn use their manufacturing and marketing muscle to sell the products worldwide.
