Video telephony suffers from the misconception that all consumers do not want to see each other and always prefer voice over video. And it’s easy to point to AT&T’s failings with the Picturephone in the 1960s and its VideoPhone in the early 1990s (see Exhibit 1) to prove that consumers would rather be heard than seen. But during the last few years video telephony has made a silent resurgence on the back of popular instant messaging platforms, reaching more than 26 million users in North America at the end of 2007. It is expected to surpass 41 million by 2011.

This Yankee Group Report takes a look at the misconceptions of video telephony, uncovers its initial reasons for failure and takes a deeper dive into its current success. This Report looks at why the current incarnation has succeeded where its predecessors have failed, forecasts its growth in both the United States and Canada, and analyzes its future potential.