Videoconferencing company PictureTel says it will focus on sophisticated, high-end products after suffering a business downturn last year. The company also would put emphasis on consultation and customised services, areas which had shown growth. PictureTel reported a loss of US$39.4 million on revenue of $466.4 million last year, compared with profit of $32.2 million and revenue of $490.2 million in 1996. It said the loss was mostly due to competitive price cuts for its desktop videoconferencing products. For example, the price of its Live200 desktop product dropped by 35 per cent, from $2,000 to $1,300. Two years ago, most of PictureTel's revenue in Japan had come from desktop models, its Asia-Pacific and Japan vice-president Naomi Tomita said. This was no longer true. Prices remain unchanged for its large group systems - formerly PictureTel's major source of income - although the company had continuously upgraded the products. PictureTel targeted quality-conscious customers, Mr Tomita said. There were many free videoconferencing software titles available on the Net, but their quality was poor and could not compete with that of PictureTel. Despite the decline in overall revenues, income from servicing increased by 26 per cent last year. The company has a service centre in Singapore that offers installation and maintenance support, and advises customers and channels partners in the Asia-Pacific region and Japan. PictureTel also develops industry-specific solutions for customers in banking, education, government, manufacturing and tele-medicine. It recently set up a service centre in Beijing to serve mainland customers. The company plans to add 10 more employees in Japan, where its only engineering centre in the region is located. It would handle research and development of new technology, including products such as Chinese and Korean-language software, Mr Tomita said. PictureTel's business in Asia-Pacific and Japan rose 20 per cent last year. Although business slowed in the fourth quarter due to the economic turmoil, the company was confident of demand because there were signs of market recovery in the first two months of this year, he said. The real problem in the region should be whether the company could collect money owing. But he said the credit issue remained 'trivial' and the company had no intention of changing its credit terms. At present, 20 per cent of PictureTel's business comes from Asia-Pacific and Japan, and 30 per cent from Europe and the Middle East. Mr Tomita said he aimed to reverse those proportions.