An Evaluation of the Integrated Voice-Data Terminal Industry: An Evolving Product Niche That Condenses Office Operations

By Peck, Laura J. | American Banker, December 5, 1984 | Go to article overview

An Evaluation of the Integrated Voice-Data Terminal Industry: An Evolving Product Niche That Condenses Office Operations


Peck, Laura J., American Banker


The communications group charter at L.F. Rothschild, Unterberg, Towbin is to conduct institutional research, provide venture capital, and perform corporate finance. In the course of our venture capital activities we have the opportunity to become familiar with communications companies that are at the forefront of new technologies and/or are involved in creating new product trends or niches. In addition to covering the more established sectors of communications such as PBX manufacturers, long distance carriers, and others, we believe providing an early analysis of emerging communications markets will benefit investors.

The integrated voice/data terminal (IVDT) industry is an evolving product niche that is going through a major redefinition mainly due to innovative product announcements by private companies such as Ambi, Davox, and Zaison. An IVDT is a professional work station that blends telephony, data communications, and computer technologies and combines a telephone and a dumb, intelligent, or local processing terminal in one integrated unit.

More than six companies have formed in the past few years with the sole purpose of designing and manufacturing IVDT systems. Rolm, Northern Telecom, and AT&T also participate in the IVDT market with first generation equipment; however, it is a small portion of their respective revenues to date. The IVDT market is heating up rapidly as:

* Many independent start-ups are now beginning volume shipments;

* Major personal computer (PC), office automation (OA), and terminal manufacturers have targeted the market and are completing final product development; and

* Several PBX suppliers are working on next generation, more advanced equipment.

Because the control of the office worker's desktop represents an enormous opportunity, manufacturers from many different industry sectors are targeting this emerging market. Consequently, the IVDT industry is currently undergoing a major redefinition due to:

* The introduction of more advanced equipment with lower end-user pricing;

* An expansion of marketing channels to include computer retail and OEM arrangements;

* A new focus on the target IVDT buyer from executive to professional workers.

We believe these recent changes could lead the IVDt sector to record significant revenue volume in 1986 and beyond versus the modest market acceptance in the past. The first IVDT's announced in 1982 by Northern Telecom and others were essentially dumb terminals with enhanced telephone and OA capability.

However, the first systems introduced met with lackluster success partially as a result of the limited functionality versus the high end-user price. Currently, many new participants in the IVDT market are manufacturing equipment that extends the unit's capability by enabling terminal emulation and/or providing access to application software. In addition, the lines between PCs and traditional IVDTs are blurring rapidly as units are being introduced with local processing and distributed processing capability.

With the recent joint ventures or equity arrangements between computer and communications companies, most notably IBM/ROLM, Wang/InteCom, and AT&T/Convergent Technologies, an IVDT is a natural first product to be developed jointly. Consequently, it is difficult to find a company in the industry not working on a first or second generation IVDT soon to be introduced. InteCom and Wang jointly announced an IVDT last month that is slated to be shipped in mid-1985, while Hewlett-Packard will market an IVDT unit manufactured by Santa Barbara Laboratories (privately held).

In addition to the 15 domestic manufacturers that the announced products, several of which are shipping in volume, we counted five additional firms including COMPAQ and Wyse Technologies that are rumored to have development programs underway.

Conceptually, IVDT systems make a lot of sense: An office worker with one unit can perform all telephone functions, access information rapidly, and, in some cases, create and transfer files. …

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