Vidtel: Frost & Sullivan Entrepreneurial Company of the Year Award

2011 South African Data Centre Green Excellence Award in Technology Innovation Cybernest

© 2011 Frost & Sullivan 1 “We Accelerate Growth”

2012 North American Video Conferencing Hosted and

Managed Services Entrepreneurial Company of the Year Award

2012

BEST PRACTICES RESEARCH


Entrepreneurial Company of the Year

Video Conferencing Hosted and Managed Services Market

North America, 2012

Frost & Sullivan’s Global Research Platform

Frost & Sullivan is in its 50th year in business with a global research organization of 1,800

analysts and consultants who monitor more than 300 industries and 250,000 companies.

The company’s research philosophy originates with the CEO’s 360-Degree Perspective™,

which serves as the foundation of its TEAM Research™ methodology. This unique approach

enables us to determine how best-in-class companies worldwide manage growth,

innovation and leadership. Based on the findings of this Best Practices research, Frost &

Sullivan is proud to present the 2012 North American Entrepreneurial Company of the

Year Award in Video Conferencing Hosted and Managed Services Market to Vidtel.

Significance of the Entrepreneurial Company of the Year Award

Key Industry Challenges Addressed by Entrepreneurial Excellence

The video conferencing market is currently going through an evolution, as enterprises open

up to software‐based and cloud‐centric solutions, and begin to regard video as part of a

broader Unified Communications (UC) context.

A successful new market entrant that is not concerned about cannibalizing legacy hardware

revenue can be in a prime position to disrupt the marketplace by offering a software, cloud-

based service that can increase video conferencing adoption particularly among cost-

conscious small and medium businesses. Such an entrant can successfully compete by

offering economies of scale that are not realizable with traditional video conferencing

systems that rely on legacy hardware.

The new breed of disruptive cloud-based video conferencing providers can differentiate their

offerings by providing features such as broad connectivity and interoperability across a wide

range of platforms. This contrasts with most standard video teleconferencing services,

which offer only generic connectivity for H.264 endpoints. Successful new market entrants

can support both legacy standards in addition to any‐to‐any interoperability with newer

platforms, such as Skype and Google. The support of many different vendor endpoints

(from vendors such as Cisco/Tandberg, Polycom, LifeSize, ZTE, etc.) is one more element of

potential success.

Another challenge that needs to be addressed by the industry is to harness a greater level

of federation among various service provider networks in order to create a “global video

directory” but a lot of work still needs to be done in this area. It is very difficult to get

service provider consensus, particularly in larger efforts, as each operator tries to push its

own agenda; additionally, the expense to make this goal reachable is quite high. While the



Open Visual Communications Consortium (OVCC) effort looks promising, it still remains a

work in progress. Hence, in the absence of this global “video dialtone”, the “meet me”

invite model (made popular by collaboration applications such as WebEx) will become more

utilized in the video conferencing world. The end-user’s contact list serves as the video

directory itself, eliminating the need to know the video addresses of other participants. The

“meet me” model can reduce the need for IT resources and simplify the end-user

experience, as the video calling address enables easy connection between video

conferencing endpoints anywhere in the world.

Finally, one additional criterion for success for a new entrant is the degree of friendliness

offered to Value-Added Resellers (VARs) and other channel partners, as over 90 percent of

all video conferencing infrastructure is sold via an indirect model. But the level of channel

interest depends on the margin that can be realized on the service. By offering a lower,

more disruptive price point, a new entrant might be able to get a higher interest from the

channel as it can increase its margin.

Impact of Entrepreneurial Company of the Year Award on Key Stakeholders

The Entrepreneurial Company of the Year Award is a prestigious recognition of Vidtel’s

accomplishments in the Video Conferencing Hosted and Managed Services Market. An

unbiased, third-party recognition can provide a profound impact in enhancing the brand

value and accelerating Vidtel’s growth. As captured in Chart 1 below, by researching,

ranking, and recognizing those who deliver excellence and best practices in their

respective endeavors, Frost & Sullivan hopes to inspire, influence, and impact three

specific constituencies:

• Investors

Investors and shareholders always welcome unbiased and impartial third-party

recognition. Similarly, prospective investors and shareholders are drawn to

companies with a well-established reputation for excellence. Unbiased validation is

the best and most credible way to showcase an organization worthy of investment.

• Customers

Third-party industry recognition has been proven to be the most effective way to

assure customers that they are partnering with an organization that is leading in its

field.

• Employees

This Award represents the creativity and dedication of Vidtel’s executive team and

employees. Such public recognition can boost morale and inspire your team to

continue its best-in-class pursuit of a strong competitive position for Vidtel.



Chart 1: Best Practices Leverage for Growth Acceleration

Key Benchmarking Criteria for Entrepreneurial Company of the Year Award

For the Entrepreneurial Company of the Year Award, the following criteria were used to

benchmark Vidtel’s performance against key competitors:

• Growth Strategy Excellence

• Growth Implementation Excellence

• Degree of Innovation with Products and Technologies

• Leadership in Customer Value

• Speed of Response to Market Needs



Decision Support Matrix and Measurement Criteria

To support its evaluation of best practices across multiple business performance categories,

Frost & Sullivan employs a customized Decision Support Matrix (DSM). The DSM is an

analytical tool that compares companies’ performance relative to each other with an

integration of quantitative and qualitative metrics. The DSM features criteria unique to each

Award category and ranks importance by assigning weights to each criterion. The relative

weighting reflects current market conditions and illustrates the associated importance of

each criterion according to Frost & Sullivan. Fundamentally, each DSM is distinct for each

market and Award category. The DSM allows our research and consulting teams to

objectively analyze each company's performance on each criterion relative to its top

competitors and assign performance ratings on that basis. The DSM follows a 10-point scale

that allows for nuances in performance evaluation; ratings guidelines are shown in Chart 2.

Chart 2: Performance-Based Ratings for Decision Support Matrix

This exercise encompasses all criteria, leading to a weighted average ranking of each

company. Researchers can then easily identify the company with the highest ranking. As a

final step, the research team confirms the veracity of the model by ensuring that small

changes to the ratings for a specific criterion do not lead to a significant change in the

overall relative rankings of the companies.

Chart 3: Frost & Sull ivan’s 10-Step Process for Identifying Award Recipients



Best Practice Award Analysis for Vidtel

The Decision Support Matrix, shown in Chart 4, illustrates the relative importance of each

criterion for the Entrepreneurial Company of the Year Award and the ratings for each

company under evaluation. To remain unbiased while also protecting the interests of the

other organizations reviewed, we have chosen to refer to the other key players as

Competitor 1 and Competitor 2.

Chart 4: Decision Support Matrix for Entrepreneurial Company of the Year Award

Measurement of 1–10 (1 = lowest; 10 = highest) Award Criteria

Growth Strategy Excellence

Growth Implementation

Excellence

Degree of Innovation with

Products and Technologies

Leadership in Customer

Value

Speed of Response to

Market Needs

Weighted Rating

Relative Weight (%) 20% 20% 20% 20% 20% 100%

Vidtel 8 8 7 9 8 8.0

Competitor 1 8 8 8 7 8 7.8

Competitor 2 7 8 7 8 7 7.4

Criterion 1: Growth Strategy Excellence

As a newer entrant, Vidtel is disrupting the video conferencing market via a software,

“Multipoint Control Unit (MCU)-less” offering that is more cost-effective and scalable than

existing offerings in the marketplace. Vidtel is using a four-pronged approach: 1- focus on

SMB segment which is ripe for a wider video conferencing adoption, 2- address the

interoperability conundrum by being a cloud provider delivering any-to-any video

conferencing service, 3- develop a channel-friendly model , 4- offer a disruptive pricing

model that encourages a wider technology uptake.

Criterion 2: Growth Implementation Excellence

Since its inception in 2008, Vidtel has been keen on securing a solid indirect go-to-market

model. This effort culminated with the creation of a channel partner program in November

of 2011, which enabled Vidtel to establish strong relationships with video equipment

vendors, Voice over Internet Protocol (VoIP) service providers, managed service providers,

and video VARs to re-sell Vidtel service. Their partners include over 40 VAR channels such

as IOCOM, Solutionz Conferencing, and CMIT Solutions, among others. The bottom-line



impact to Vidtel has been very positive with wins such as Drexel University that came via

these channels.

Criterion 3: Degree of Innovation with Products and Technologies

Vidtel’s cloud-based video conferencing service delivers B2B connectivity across any

standard video conferencing device (such as Cisco/Tandberg, Polycom, LifeSize, and ZTE,

among others) and newer platforms such as Skype and Google Talk. The company has a

comprehensive product portfolio that encompasses on-demand multi-party rooms, video

dialtone, a Public Switched Telephone Network (PSTN) voice add-on, and a gateway offering

that adds Skype/Google Talk to an existing MCU. Vidtel has also been able to quickly

establish a global network footprint, with redundant data centers in North America, Europe,

Middle East, and Africa (EMEA), and Asia-Pacific, relying upon a mix of public and private

clouds.

Criterion 4: Leadership in Customer Value

As customers transition towards software-based, cloud-centric solutions, a disruptive pricing

model becomes an important success component. The Vidtel Meet Me service allows

multiple parties to dial into an assigned video conferencing bridge on demand for a

disruptive price of 15 cents/minute or a monthly fee of $149 for unlimited usage. The Vidtel

Connect service enables one‐to‐one connectivity on demand for a monthly subscription fee

similar to a mobile phone subscription ($29.95). For an additional $10 per month, the Vidtel

Connect service becomes the Vidtel Connect Pro, which also adds audio/Private Branch

Exchange (PBX) capabilities, local calling, and unlimited calls within North America. The

bottom-line result: for zero CAPEX dollars, Vidtel provides an OPEX solution that is more

competitive than the offerings of any other participant in the marketplace, be it an MCU

vendor, a traditional bridging service provider, or a new cloud “MCU-less” provider. Vidtel

can do this as the consummate “lean startup” that it is—with its business model, it does not

need to offer a return to venture capital firms or invest heavily in advertising, focusing

instead on delivering value to its end customers.

Criterion 5: Speed of Response to Market Needs

Vidtel also elected to tackle the marketplace from a different angle, namely one that

addresses both the advent of the Bring-Your-Own-Device (BYOD) paradigm and the

proliferation of video on mobile and other devices. In order to achieve this, in June 2012,

the company introduced its Vidtel Gateway product. The Vidtel Gateway is geared towards

enterprises that have an MCU that is still going through its depreciation cycle yet does not

support external participants on desktop PCs, laptops, smartphones, or tablets. Because of

their hardware investment, these customers are seeking a solution that can enhance the

functionality of their existing Customer Premises Equipment (CPE) video equipment. The

Vidtel Gateway addresses this need by adding Skype and Google Talk capabilities to their

MCUs. Vidtel was able to quickly launch this new offering in response to requests made by



channels such as Solutionz Conferencing, Inc. Vidtel has also demonstrated speedy

response to market needs by providing WebRTC support, winning the Best Conferencing

Award at the WebRTC Expo in November 2012.

Conclusion

The key elements of Vidtel’s value proposition are price-performance excellence,

enterprise-grade service, and channel friendliness. These characteristics will enable easy

connection between video conferencing endpoints anywhere in the world, while leveraging

cloud technologies that are more economical and scalable than other existing solutions.

By remaining committed to expanding its existing global network and optimizing its

performance while delivering good service at attractive price points to the mid-market,

Vidtel will capitalize on the “sweet spot” for video conferencing market adoption.

Therefore we believe that the company is uniquely positioned to be one of the video

conferencing services industry’s new “companies to watch” from an entrepreneurial

standpoint.



The CEO 360-Degree PerspectiveTM

- Visionary Platform for Growth

Strategies

The CEO 360-Degree Perspective™ model provides a clear illustration of the complex

business universe in which CEOs and their management teams live today. It represents

the foundation of Frost & Sullivan's global research organization and provides the basis on

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analysis of best-practice performance by industry leaders.

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growth strategies. As illustrated in Chart 5 below, the following six-step process outlines

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analyses and recommendations.

CEO's 360-Degree Perspective™ Model



Critical Importance of TEAM Research

Frost & Sullivan’s TEAM Research methodology represents the analytical rigor of our

research process. It offers a 360-degree view of industry challenges, trends, and issues by

integrating all seven of Frost & Sullivan's research methodologies. Our experience has

shown over the years that companies too often make important growth decisions based on

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integration of these research disciplines into the TEAM Research methodology provides an

evaluation platform for benchmarking industry players and for creating high-potential

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Chart 6: Benchmarking Performance with TEAM Research

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Vidtel: Frost & Sullivan Entrepreneurial Company of the Year Award

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