Cisco Systems, the world's largest networking equipment manufacturer, is collaborating with the Xiamen government to develop the city's software industry while jump-starting adoption on the mainland of the company's advanced videoconferencing system.
Fredy Cheung Sze-wah, Cisco's managing director for southern China and Hong Kong, declined to provide financial terms for the strategic partnership unveiled on Saturday, but said the use of a TelePresence system in Xiamen was Cisco's first for the public sector in Asia.
Launched in October last year, Cisco's TelePresence system uses high-definition video, wideband spatial audio and a unique camera and lighting set-up to link two rooms so that they resemble a single conference room. Installation costs between US$79,000 and US$299,000.
Cisco's strategic initiative will focus on the Fujian city's software park, home to overseas-funded and domestic small and medium-sized enterprises. 'The company will share best practices and provide the technology platform for the Xiamen Software Park to train networking professionals and help develop e-government internet protocol-based applications, such as unified communications, to enhance public service,' Mr Cheung said.
The TelePresence platform will be the first to be installed at the Cisco Innovations Experience Centre inside the software park.
'We expect this solution to enhance communications and collaboration among various Xiamen government departments. We also hope that it will have a profound impact for the widespread adoption of the technology among governments across Asia,' Mr Cheung said.
The mainland is Asia's largest market for videoconferencing equipment, according to consulting firm Frost & Sullivan. Demand is projected to grow at an average rate of 14.8 per cent annually from 2005 to 2012, when the market will be worth US$235 million.
Demand for videoconferencing equipment is being spurred by the technology's use in manufacturing industries in the Pearl River Delta, according to a report by the Hong Kong University of Science and Technology.
Awareness of videoconferencing systems was growing among mainland banks and insurance firms, said a study last year from the Chinese University of Hong Kong.
United States-based Cisco faces competition from rival systems by Polycom, Hewlett-Packard and Tandberg, which last week bought rival videoconferencing equipment provider Codian for US$270 million.
The steep price tags of high-definition videoconferencing systems at present could limit their growth.
'True telepresence, where a videoconferencing system and the environment create the illusion that the remote participants are in the same room with you, is an expensive proposition that will limit these systems to a very high-end market niche,' said Andrew Davis, managing partner at Wainhouse Research. 'We don't see the industry growing to more than 2,000 units a year. Nevertheless, some companies will find telepresence useful in some situations.'
Pearl River Delta businesses have been keen on the technology
The expected value of the mainland market for videoconferencing equipment by 2012, in US$235m