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Video conferencing vendor consolidation: Changing the pace of video adoption

Alliances and acquisitions with big-name video conferencing vendors like Cisco, Tandberg, Polycom and Siemens, may push enterprise video conferencing to widespread video conferencing adoption.

Alliances and acquisitions in the video conferencing market may push video conferencing to widespread video conferencing adoption.

Video conferencing vendor acquisitions and alliances
  LifeSize Communications


Over the last decade, Cisco has been aggressive with acquisitions, purchasing 48 venture capital-backed companies between 2000 and 2009. With Cisco Systems' $3-billion deal to acquire Norwegian video conferencing powerhouse Tandberg, enterprise video may, at last, take to the mainstream as its been hyped to do for years.

With Tandberg in the fold, Cisco will be the market leader in end-to-end enterprise video, a position that it really hadn't tried to grow organically, said Irwin Lazar, principal analyst and program director for collaboration and convergence at Nemertes Research.

"Cisco really only had the high-end solution," Lazar said. "They haven't got a good approach for [non-Telepresence] room systems. They haven't got a desktop strategy. Their MCUs [Multipoint Control Units] are from their OEM agreement with Radvision."

"If you look at the Tandberg portfolio, they have a much better end-to-end [line]," Lazar said. "They have a much better management platform; they have a gateway out to 3G and 4G that gives them the ability to deliver video to mobile devices. All those pieces Tandberg had and Cisco didn't."

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.

The Cisco-Tandberg deal will create some polarization in the market. All the major unified communications vendors have been building relationships with both Polycom and Tandberg in an effort to improve their enterprise video story. Now, this partnership dynamic will shift, and customers could get caught up in waves of change.

Cisco's acquisition of Tandberg is also a moment of truth for Polycom, the former market leader.

More information on the Cisco-Tandberg acquisition:
Picking up the pieces after Cisco finally gets its hands on Tandberg


Ira Weinstein, senior analyst with Wainhouse Research, said that the Cisco-Tandberg acquisition would force other unified communications and telephony vendors to embrace Polycom in an effort to differentiate their own enterprise video strategies.

"[Polycom is] still a leader in terms of installed base," Weinstein said. "There are more Polycom video conferencing systems out there than anyone else's, including Tandberg. Polycom is not a trivial player."

Unfortunately for Polycom, its biggest rival now has extremely deep pockets. It will need to step up its game. If it fails, enterprises will have less choice, Lazar said.

"Polycom is going to have to be extremely aggressive with pricing and go after channels in order to remain a viable No. 2 vendor," he said. "In the short term, this is good for customers [of all vendors] because that will provide more competitive pricing from Polycom and it could keep Cisco and Tandberg's prices down low. But if Polycom stumbles and is not able to keep its market share up, then you run into a situation where it's Cisco-Tandberg and no one else. All the other players are very small, whether it's Mitel, Lifesize, Aethra or Vidyo. None of these have the reach, channel and support structure of Cisco-Tandberg. "

Recently Polycom picked up an infrastructure partner, too, when it announced a deal with Juniper Networks. In mid-2010, the two companies will release updates to their products that will allow service providers to optimize their networks for Polycom videoconferencing products.

Siemens Enterprise Communications recently made its move, announcing a new videoconferencing alliance with Polycom. As Mike Vizard at CTOEdge pointed out, Tandberg had been Siemens' go-to partner on video solutions prior to the Cisco-Tandberg deal. Siemens will continue to support Tandberg products with its OpenScape UC products, but Polycom is now its preferred partner.

More information on Polycom:
Polycom delivers large-scale multipoint video conferencing

LifeSize Communications

A much smaller deal in the high definition (HD) videoconferencing market was Logitech's acquisition of LifeSize Communications. PC accessory company Logitech has bought LifeSize Communicaitons, a six-year-old vendor of HD desktop videoconferencing and room-based telepresence products for $405 million.

Logitech is best known as a manufacturer of peripheral devices for PCs, especially keyboards and mice. With only a line of standard-definition webcams, Logitech's specialty is not enterprise video.

With LifeSize, Logitech graduates from selling peripheral devices to consumers and small businesses to selling an enterprise solution. It's a whole different ballgame. In addition to endpoint devices, LifeSize sells HD videoconferencing infrastructure, such as multipoint control units (MCUs), gateways and security devices.

With video-based communication, the more people who can use it, the better.

"Like any network application, the usefulness is directly proportional to the number of people on the system," said Irwin Lazar, principal analyst and program director for collaboration and convergence research at Nemertes Research. "If you only hold videoconferencing sessions with one office, there's not a whole lot of value. But if every office in the company has a video system and anybody can use it, there's a huge amount of value."

This is one of the criticisms that competitors level at Cisco Systems' high-definition (HD), immersive room-based Telepresence technology, which can cost a company $300,000 or more per videoconferencing room.

LifeSize focuses on the technology and relies on partners to optimize the meeting room. In contrast, a vendor like Cisco optimizes the lighting and acoustics and provides furniture in order to create an immersive experience that almost fools users into believing that they are in the same room with someone on the other end of the video meeting. Lazar said the room optimization that Cisco offers is a differentiator, but some companies still prefer affordability.

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