Videoconference start-up Vidyo unveiled a new technology on Tuesday, allowing its videoconferencing service to run using virtual servers, raising pressure on market leaders Cisco Systems and Polycom.
Chief Executive Ofer Shapiro said clients can expand their Vidyo conferencing network without any capital investments after buying Vidyo's licence for the first site when they use servers of VMWare or Amazon.
"A lot of return-on-investment calculations become positive immediately when you put in a capital expenditure of zero," Shapiro said in an interview from New Jersey via Vidyo's own conferencing service.
Traditionally videoconferencing has demanded dedicated equipment and computers, but Shapiro said Vidyo's Internet-based technology allows high-quality service when using outsourced servers already today, and the firm would roll out a special virtualized offering next year.
For service providers offering virtual videoconferencing would cost as little as $0.3 cents a minute, he said.
Vidyo, which competes against larger rivals Cisco's Tandberg division, Polycom and Logitech's Lifesize, has raised in total $97 million (60 million pounds) from Menlo Ventures, Rho Ventures, Star Ventures, Four Rivers Group and QuestMark Partners.
Vidyo's technology is used by Google, Hitachi and Ricoh among others.
In the computing space virtualization has been one of the fastest growing markets as clients are attracted to the idea which promises to cut their spending on IT, as it centralizes administration and effectively lets customers only pay for the amount of computing power they actually use.
"Virtualization has affected almost every aspect of IT, and network infrastructure is the last untapped bastion," Zeus Kerravala, analyst at ZK Research, said in a statement.
"Vidyo is the first company to demonstrate the impact of virtualized video conferencing in terms of scalability and economics on the most expensive part of the network infrastructure," Kerravala said.
(Reporting By Tarmo Virki, editing by Bernard Orr)