Article

Cisco-Tandberg deal could create conflict inside IT organizations

Shamus McGillicuddy, News Editor

Cisco Systems' $3 billion acquisition of Tandberg could force many enterprises to rethink how they acquire video conferencing products.

Cisco is a networking and telephony giant with millions of loyal customers, but Tandberg and its main rival Polycom have traditionally had a different set of customers. Cisco's customers include millions of network engineers and administrators, but they also include the CIOs feel secure in knowing that Cisco consistently ranks as a leader in most of the Magic Quadrants and market share reports that hit the presses every year. Polycom and Tandberg, on the other hand, have sold their products mostly to video conferencing specialists and midlevel IT managers.

    Requires Free Membership to View

To learn abut how this merger affects the enterprise video market, read:
Cisco-Tandberg merger finally makes enterprise video mainstream

"So Cisco was doing relationship selling, leverage their contacts and their footprint [with Telepresence]. It's a very different sell, and that's why they positioned their products as Telepresence and not as video conferencing," said Ira Weinstein, senior analyst and partner for Wainhouse Research LLC. "They didn't want to deal with the video conferencing IT folks. They wanted to deal with executives."

Now Cisco and Tandberg have two constituencies to address, and those buyers might not agree on vendors.

"You will find enterprises having internal debates," Weinstein said. "The video conferencing team will be using Polycom, and the IT team will be in the Cisco camp. Now the IT team and the video team will sort of be at odds a bit trying to figure out which products to purchase for video conferencing. Before today, that discussion [wasn't] as intense because the options were really Polycom or Tandberg. Now you have a Cisco versus Polycom discussion, and that should make things interesting in the enterprise.

In fact, Cisco's decision to buy Tandberg could be an implicit admission that its initial video strategy, which emphasized the high-end Telepresence product, was partly flawed.

"Cisco was already in the video conferencing market, but it wasn't a very dominant player," Weinstein said. "And the reason is that they have focused very heavily on making their solution all about providing this telepresence experience. So we have Cisco doing a beautiful job of getting lots of sales and being the market leader in this small portion of the market in the high end, but they have not been able to access the whole rest of this big market, about $2 billion. So the acquisition of Tandberg gives them that access to the rest of the market, and solves a couple problems for them."

Weinstein said the first of those problems was interoperability. He said Cisco's Telepresence does not interoperate well with the rest of the video conferencing world because it is not standards-based, although Cisco has made efforts recently to move toward Session Initiation Protocol (SIP).

"It also gives them a standards-based portfolio, which they didn't have and which has been a major complaint about Cisco's video conferencing offerings," he said.

David Hsieh, Cisco's vice president for emerging technologies, said the acquisition of Tandberg simply complements Cisco's successful video strategy by giving it a broader end-to-end portfolio. He said Cisco created Telepresence for the very high-end video communications market and then had the video capabilities of its SaaS-based conferencing platform, WebEx, for the very low end of enterprise video.

"But we had very little in between," Hsieh said. "[Tandberg] has a portfolio of endpoints that goes all the way from desktops to conference rooms and other form factors, and it's very complementary in terms of the overall [enterprise video] strategy."


There are Comments. Add yours.

 
TIP: Want to include a code block in your comment? Use <pre> or <code> tags around the desired text. Ex: <code>insert code</code>

REGISTER or login:

Forgot Password?
By submitting you agree to receive email from TechTarget and its partners. If you reside outside of the United States, you consent to having your personal data transferred to and processed in the United States. Privacy
Sort by: OldestNewest

Forgot Password?

No problem! Submit your e-mail address below. We'll send you an email containing your password.

Your password has been sent to: