Polycom, a web conferencing and video conferencing service provider, this week reported its second quarter results, which beat revenue estimates but missed earnings estimates by only a single cent. Revenue grew 16% to $271.6 million. Net income grew 77% to $17.8 million. Polycom is just one of many video conferencing service providers to see sales increase as the price of travel makes web conferencing and video conferencing an attractive alternative.

In a recent study, Gartner expects web conferencing and video conferencing solutions to generate $600 million in annual equipment revenue and $1.5 billion in revenue including services by 2010. In addition, in an IT budget priority survey for enterprises, online collaboration moved up two slots to number eight.

Web conference and video conference services are growing rapidly, most notably outside of the United States. North America revenues were up 7% for the year, Europe grew by 36%, Asia by 20%, and Latin America by 36%.

Polycom expects its telepresence and high definition video conference business to continue to benefit from the increasing costs of travel, particularly during this economic slowdown. It is also increasing its marketing and research spending to increase the financial benefits from the trend. For the third quarter, Polycom expects revenue to increase 3%.