PictureTel

» see picturetel.com as it lived, on the wayback machine

~ the last words ~

A video call used to run on a meter. Two ISDN B-channels bonded to 128 kilobits, billed by the minute on each channel, on a line a company had to order from the phone monopoly and wait weeks to have installed. That is the world PictureTel was built for and the reason it was worth half a billion dollars a year. Somebody had to make the picture small enough to fit down that pipe, and for about a decade PictureTel was the company that had.

It started in August 1984 as PicTel, out of MIT. Brian Hinman and Jeffrey Bernstein were the students and David Staelin was the professor, and the technical bet came from video compression work by Anil Jain at UC Davis. By July 1986 they had one of the first real-time systems doing motion compensation and transform coding together, and the C-2000 codec that came out of it was the first commercial box anybody could buy that did the job. The name changed to PictureTel in 1987 because PicTel kept getting confused with Pacific Telephone.

What followed was fifteen years of being the default. The product line grew from codecs into whole rooms, the System 4000 and later the Concorde 4500, then came back down into desktop units and a Windows product called LiveShare Plus. Revenue passed $482 million in 1996 and better than $490 million across the peak. In a large company in the mid nineties, booking the videoconference room and booking the PictureTel were the same sentence.

I have no memory of this because nobody outside a corporation did. In Turkey through the nineties, ISDN was a Türk Telekom product a business ordered and paid a standing charge on, not something that reached a house or a student. My side of the decade was a 33.6k modem and a per-minute local call to the same monopoly, and a 128 kilobit switched video session priced per channel per minute sits on the other side of a line I never crossed. The gap is not regional. It is that this was equipment you were assigned time on, and I was never anybody's employee in that decade.

~ the record ~

~ what a codec was worth ~

The technical problem was brutal in a way that is hard to feel now. Uncompressed television is tens of megabits a second and the pipe was 128 kilobits, so the compression ratio needed was around three orders of magnitude, in real time, on hardware built from parts you could buy in 1986. PictureTel's answer was motion compensation, sending what changed between frames rather than the frames, plus transform coding on what was left.

That work went into the standards. H.320 and the codecs underneath it are the reason a machine from one vendor could call a machine from another, and PictureTel's engineers were in those rooms. The company sold hardware and its actual asset was being early to the math, which is a fine business right up until the math becomes a chip anyone can buy.

~ the restatement ~

In September 1997 PictureTel announced it was reversing or deferring revenue on a set of leasing and indirect-channel deals, and restating the first quarter of 1997 along with the last two quarters of 1996. The numbers moved were not enormous on their own, around $1.5 million off a reported $118.2 million quarter and about $12 million off a year that had booked $482.5 million, somewhere between one and three percent.

The size was never the point. A hardware company that has been recognizing revenue on channel deals ahead of the cash is a company whose growth curve is partly a decision rather than a fact, and once that is public every subsequent quarter is read against it. The restatement landed in the same period Polycom was coming up from underneath with cheaper equipment aimed at the same rooms. PictureTel spent the next four years shrinking while defending a price nobody had to pay anymore.

~ bought by its own founder ~

Brian Hinman left PictureTel and in 1990 co-founded Polycom with Jeffrey Rodman. Polycom built the conference phone that ended up on the table in every meeting room on earth and then moved up into video, selling against the company Hinman had started six years before that.

In October 2001 Polycom closed a $362 million acquisition of PictureTel, taking the iPower desktop line along with a service organization larger than its own. The brand stopped appearing on products shortly after. There is no ending to point at here, no announcement page and no final day for customers, only a name that stopped being printed on the front of the box. The domain today serves a slot machine advertisement, which is its own kind of record of what happened.

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