LifeSize Communications has recently raised $25 Million in a Series D round of funding led by new investor Lehman Brothers Venture Partners with participation from previous round investors Austin Ventures, Norwest Venture Partners, Pinnacle Ventures, Redpoint Ventures and Sutter Hill Ventures. The story was covered best by the Austin American-Statesman and can be found in its entirety Here. The emphasis below is mine.

Austin-based LifeSize Inc., which sells high-definition videoconferencing systems, has raised another $25 million in venture capital, bringing its total investment to $81 million. Lehman Brothers Venture Partners was the lead investor. Other investors include Austin Ventures, Norwest Venture Partners, Redpoint Ventures, Sutter Hill Ventures and Pinnacle Ventures.

The company, founded in 2003, will use the money to expand sales and marketing, CEO Craig Malloy said.

"For the first three years, we were focused very much on getting our product developed," Malloy said. "Now that we've done that, we need to go tell everybody about it."

Last year, LifeSize released the industry's first high-definition gear for audio- and videoconferencing. The company says the images generated by its equipment are up to 10 times as sharp as the video images of conventional conferencing equipment for about the same price.

Malloy said the company has sold 1,000 systems. The company is targeting large corporations, government agencies and major universities. Prices range from $8,000 to $12,000 each.

"They are far in front, with a unique hardware design that gives them some advantages," said analyst Andrew Davis with Wainhouse Research LLC in Brookline, Mass. "But they're going to face some healthy and stiff competition moving forward."

Although LifeSize was the first to market, rivals Polycom Inc. of Pleasanton, Calif., and Tandberg ASA of Oslo, Norway, are responding with their own high-definition offerings.

The challenge will be setting itself apart, Davis said.

"They've been creative in their marketing. I think they just need to do more of it," Davis said.

Videoconferencing has grown in popularity in recent years, with sales growing from 25,000 systems in 1997 to 145,000 in 2005, according to Wainhouse Research.

Fewer than 100 of those sold last year were high-definition, Wainhouse said.

LifeSize was founded by videoconferencing veterans Malloy and Michael Kenoyer, who were founders of Austin-based ViaVideo Communications Inc., which was acquired in 1997 by Polycom.

The two left Polycom in 2002, convinced that technology was available to build a high-definition system. They raised $18.5 million a year later and began hiring engineers.

HSL's Thoughts and Analysis

Someone asked me two weeks ago at the VON conference in Boston what I had against LifeSize Communications and I got another variation of the question this week as well. Both questioners' assumptions were based on my critique of LifeSize's focus on the traditional "plastic-camera-on-the-TV-set- on-the-dessert-cart" format over creating solutions that more effectively address the human factors of meeting participants in our recent paperTelepresence, Effective Visual Collaboration and the Future of Global Business at the Speed of Light

In the paper I pointed out:

The logo of high-definition videoconferencing provider LifeSize Communications (whose website refers to its set-top videoconferencing solution as "telepresence-like") unintentionally crystallizes one important way videoconferencing goes wrong. The LifeSize logo seems to suggest that the key to achieving a more realistic experience is by increasing the size of the image in the vertical plane.

However, humans have a forward-facing vertical field of view of between 120 and 135 degrees, and a combined horizontal field of view of about 180-200 degrees.

In achieving a realistic, immersive "Life Size" visual experience, it is actually more important to address the horizontal field of view and peripheral vision. Telepresence providers achieve this with multiple, large format displays and video walls. LifeSize Communications, which makes a superb high-definition camera and codec, should be focused in the opposite direction:

That rather unfortunate public critique was born out of frustration rather than malice (and the fact that I am, unfortunately, somewhat of a "telepresence bigot"... I am in a 12 step program...) In reality I have been a big fan of LifeSize from the beginning. I have admired Craig Malloy and Michael Kenoyer's work since the Via Video days. I have met a good number of folks from LifeSize and have enjoyed spending time with everyone whom I have met. I have favorably mentioned the LifeSize camera and codec in both the paper (where I called it superb) and in my review of the Digital Video Enterprises Executive Telepresence System in which their codec is bundled. The fact that the company is located in Austin, Texas (I am a misplaced Texan and Austin is my favorite city and was my temporary home last year) also gets the company big points in my book.

However, it has been difficult to watch LifeSize ignore the tremendous improvements in usage and end user acceptance that telepresence group systems have demonstrated for over four years in favor of another plastic camera-on-a-TV-set-on-a-dessert-cart offering (albeit one with high definition video) and wasting their time and treasure on products like the now, evidently defunct, LifeSize Executive vs. building high dollar, high margin, high satisfaction telepresence solutions.

The LifeSize Executive - Gone from the LifeSize Website... Permanently?

While the company was the first to deploy a high-definition codec running at sub-T1 speeds last year, that lead seems to be narrowing. In the past several weeks I have seen other high-definition codec solutions at Teliris (Can't tell ya who the codec manufacurer is just yet) and yesterday got to experience a demonstration of Polycom's upcoming high definition codec (along with a demonstration of one of the first production Polycom RPX telepresence environments... more on those demonstrations in the coming days). It's probably good that LifeSize got $25MM more in go-go juice cause the competition is coming up fast...

Hope Springs Eternal... Is the LifeSize boat starting to turn towards telepresence?
To LifeSize's credit they are working with Digital Video Enterprises who have integrated the LifeSize camera and codec into their Executive Telepresence System and recently I have heard rumblings that LifeSize might be developing a multi-screen group telepresence system as well. I have also heard that some customers are inquiring about installation of the LifeSize codec into telepresence environments manufactured by Destiny Conferencing. All positive news in the Lab's book.

So hopefully this sets the record straight... I harbor no ill will towards LifeSize, congratulate them on their recent financing, wish them well in all future endeavors, and, hopefully, look forward to visual collaboration solutions that better address the human factors of participants. Because at the Human Productivity Lab... While Productivity is our Middle Name we Always put the Human First!

Finally, while there are some issues where the folks at LifeSize and I might disagree, I am sure there are many others areas where we can find agreement...

Go Horns!!!