Multipoint Control Unit/Gateway video conferencing system

Accord Video Telecommunications is one of the hottest names in communications in Israel, with a significant step in the door of a market growing by leaps and bounds. Whether or not the company is a start-up, with 110 employees and a sales turnover last year of $10 million, is for the venture capital funds invested in it to say. Accord has so far received $17 million from Israeli funds Concord, Nitzanim, Star and Veritas, and foreign funds Gilde and ATV.

Accord Video Telecommunications develops and markets multipoint control video conferencing units that enable many participants to all be viewed on the screen. It combines video switching, audio mixing and data routing,

Accord was established in 1993 by Gideon Rosenfeld and Sigi Gavish. Rosenfeld, a pioneer in Israeli high tech, was one of the builders of the first mainframe computer at the Weizmann Institute, served as vice president for development at Scitex in the glorious days of Efi Arzi, and was a manager at Orbot Instruments. Gavish came with fifteen years' experience in building switches at Tadiran behind him.

Accord managed to recruit two major players from its main competitor VideoServer: Jules De Vinier, who serves as company chairman, and Phillip Keenan, executive vice president for marketing and sales. Last year, Rosenfeld passed away, and Gavish remained as head of the company's activities in Israel.

The advantage of Accord's products lies in the fact that they integrate into existing systems. The company's customers are divided into two categories: customers who purchase the equipment in order to upgrade existing systems (these represent 60% of sales, and include Microsoft, Nortel, the German federal police, Credit Suisse Bank and the US Treasury Department); and the others are video conferencing service providers (which include the big names such as France Telecom, Sprint, MCI and Deutsche Telekom). Twenty-two of the thirty service providers in this area are already Accord customers.

This is an ever growing market, constantly adding new applications. One of them is distance learning in educational institutions, a field that is very heavily supported in the US by the government. It is expected to be an Internet star in the future, but, at the moment, bandwidth is not sufficiently wide to support it. Another application is Telemedicine - the use of computerized communications to assist in diagnosis of diseases and distance medical procedures - a field that gathering momentum.

Another market trend that makes Accord a company with large potential is the significant lowering in the cost of equipment for video conferencing in general. Keenan says that prices will drop 90% within two years. "A corporate station, which cost $50,000 two years ago, can now be purchased for $5,000. Apart from that, it is no longer necessary to allocate a special room to install the equipment, which can now be moved around on a trolley. The market is therefore growing, and corporations can afford to purchase it." The system Accord developed costs $50,000-$500,000 and an organization needs to purchase only one.

Keenan says that only 1-2% of corporate conference rooms are equipped with such systems, and the potential market is therefore huge. De Vinier says the market is expected to start using video conferencing on PCs, and Accord has software that supports this. The company has just come out with a product that connects between IP (internet Protocol) and ISDN. This is another, unique, module for Accord's product.

Both VideoServer, its main competitor, and Lucent has developed similar equipment. However, according to the company personnel, the two competitors have lower quality technologies. Keenan says Accord's advantages are: the interface, the option to enlarge the system as demands increase, and the ability to diagnose problems from afar.

Accord Video Telecommunication's R&D center and headquarters are located in Petach Tikva, Israel, and it has offices in Atlanta, GA, and in the London area.

Gavish says the company expects to hold a private placement towards year-end for $10-15 million, or an IPO, depending on market conditions. The company posted profits in the last two quarters of 1998, and it plans to double sales this year, and increase R&D by 50%.

Published by Israel's Business Arena February 15, 1999