Consistent technological advances – sometimes referred to as “Moore’s Law” – continues to drive IT performance up and prices down. This is clearly happening in video collaboration technology, where new technology, lower price points and new business models continue to spur corporate adoption and use.
These changes are having dramatic effects in Latin America. Earlier this year Polycom was recognized by Frost & Sullivan as “2017 Best Practices Award – Latin American Enterprise Communications Endpoints Company of the Year”.
“Due to this user experience’s vision and, also referring to the strong partnership and integration with Microsoft solutions, Polycom has already expanded its technology in several organizations in this market segment”, says Sebastian Menutti, Digital Transformation Industry Analyst at Frost & Sullivan.
WorkSpace Today reached out to Pierre Rodriguez, Vice-President for Latin America and the Caribbean at Polycom for a deeper dive.
- What kind of economic growth trends are you seeing in Latin America?
Latin America has been experiencing a great deal of volatility over the past two and a half years, both politically and economically. The economic volatility is due especially to a reduction in commodity prices, particularly oil. This greatly restricts the budget of countries and even more so of those heavily dependent on oil, such as Mexico, Colombia and Ecuador.
The low commodity price does not help in the financial or economic part of these countries. On the political side, we have seen instability and some governments losing power, which has generated short-term disruption due to the changes. So, it has not been a particularly business-friendly scenario compared to earlier periods of greater stability in Latin America.
All that said, this actually is not necessarily bad for our technology. Why? Because some companies only make changes when they really “feel the pain.” Sometimes a crisis is not necessarily a negative moment, it could it be a moment of opportunity, especially in an enterprise segment in which one of the first budgets items that is typically cut is travel. Thus, the challenge becomes “how can I operate with this new climate with half my travel budget cut?” It is at this point that companies look at technology as a potential solution.
Typically, our government customers have less flexibility to respond to budget cuts. So we have observed a decrease in the sales to Government across the region, but not in all them. However, that has been offset by growth in the enterprise segment.
- What role does innovation, including strategic use of video conferencing, play in fueling economic growth?
Companies have been competing fiercely with one another in Latin America for a long time. But in the past, that competition was mostly concentrated in the individual countries in the region. For example, competitors might be located in different cities but focused just on the Brazilian market.
This is no longer true today. One consequence of globalization is the fact that companies are competing with companies in China, India and worldwide. This forces companies to seek more efficient solutions. The scale is different today, and many companies look at technology differently – as a factor in ensuring competitiveness, recognizing the strategic value of technology.
In this sense, we have been able to extend the use of video, no longer only as an application to reduce travel costs. Today, many companies contact us to talk about the video application as a disruptive change in the way in which the company operates as a whole. This is what we mean when we encourage companies to evaluate their “workflow.”
The company understands how it operates today, and the it challenges itself: “How could I operate in a more efficient way?” It’s not thinking purely about the efficiency of each employee’s time, but it’s fundamentally changing its business processes. Companies that start using video to talk with its customers for selling more is an example of a change in a critical business process. Video does not simply reduce the cost of travel or improve efficiency, it is a different way of conducting your business processes with and by video.
The competitive, globalized world in which we all work forces companies to seek in technology a business innovation solution, often referred to as digital transformation. Basically, videoconferencing is in the center of this digital transformation agenda. It is the company transforming itself, transforming its processes for the digital world to remain viable in the long term.
Videoconferencing is a media that still has much to be explored. Some companies already understand this and are ahead of competitors with the application. These would be our bigger customers that use videoconferencing extensively for meetings and throughout their production chain. There are also some companies that have moved more slowly but are joining the transformation now. The need for digital transformation is a great adoption catalyst for video. This of course is true globally, not just for Latin America.
- What do you see as the biggest areas of opportunity within this region?
I would say that an area of great promise is the SMB market, which is not a market that we have historically focused on. The main reason for this is because until recently the price of a professional videoconference solution was not typically within reach of a SMB, not just the equipment but also the cost of network connectivity.
Today the “stars have realigned” and massive network connectivity is available at a very low price, along with other technologies. Now you do not need fiber coming into the small business. Business level connectivity is so much more accessible, and, as a result, we have are expanded our portfolio of products.
RealPresence Debut is an example of a product focused on the SMB market, with a completely different price paradigm. Years ago, the cost of such a videoconference solution was around U$ 80,000. That number has now fallen to about U$ 3,000! And it’s possible to do leasing term of thirty-six months, which means a little more than U$ 100 provides a professional videoconference solution to the small business.
This is especially revolutionary since when you look at Latin America, the region’s GDP is essentially supported by SMBs. Measured by employment numbers and national income generated, the largest percentage is small and medium enterprises. There are countries in Latin America, such as Peru, in which the economy is essentially totally made up of SMBs, and Brazil is not that different. The affordability of modern videoconferencing has opened up a massive opportunity in the region, and the growth it could spur has attracted a lot of attention.
One remaining barrier to overcome is the lack of SME understanding or awareness that this professional-grade technology is available and affordable. Several companies that contact us say that “we tried to provide videoconference with a free solution, via Skype and other technologies, because we already use them and know them.” However, they did not have a consistent experience and questioned the reliability of those services.
These companies are looking to us for a more professional solution, even if they do not know professional videoconference has dramatically changed. It’s our job to educate them, and usually when we explain the new price paradigm, SMBs say they “had no idea it could be so affordable”. This digital transformation is now within reach for SMBs, and we are seeing accelerating rates of adoption.
- You’ve recently received the 2017 Latin American Enterprise Communications Endpoints Company of the Year Award from analyst firm Frost & Sullivan. What’s the significance of this recognition?
The recognition of Frost & Sullivan is very meaningful for Polycom. We feel it validates our growth strategy in terms of our solutions, from IP telephony to videoconferencing, and validates the scale of the opportunity for businesses in this region.
As prices fall, the technology becomes increasingly more accessible and the addressable market grows exponentially. We have a strategy that goes through distribution, and this recognition facilitates adding new channels and new distributors, such as Ingram Micro which just was added to our portfolio. The opportunity is vast and we’re making sure we have the scale to service our segment.
Receiving such recognition as a leading company in the video and voice endpoints category is validation of the technology, of our strategy and of the region itself. We’re very honored for the recognition of Frost & Sullivan, and feel it will help us spread the word to our SMBs regarding the new paradigm of videoconferencing.