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Video communications startups Pexip and Videxio to merge

The merger of startups Pexip and Videxio will give service providers and enterprises a one-stop shop for video conferencing software, analysts said.

The startups Pexip and Videxio plan to merge into a single company. The move will unite two complementary portfolios to give service providers and enterprises more flexibility in building and deploying platforms for video conferencing, both on premises and in the cloud.

Founded in 2012, Pexip makes a software platform that service providers and enterprises can use to build video conferencing systems. The software can run on hardware in a company's data center or the cloud.

Pexip also partners with Microsoft and Google to facilitate interoperability between their online meetings services -- Microsoft Teams and Skype for Business and Google Hangouts Meet -- and third-party endpoints from Cisco and others.

Founded in 2011, Videxio offers a cloud-based video conferencing platform similar to Zoom and Cisco Webex. The product is sold mostly through service providers and other channel partners, which rebrand the service as their own.

If the merger closes as planned by year's end, Pexip will be able to offer enterprises a prebuilt, cloud-based user interface for video conferencing in addition to its interoperability service and software platform for developers. (The combined company will operate under the name Pexip.)

"The merger creates a one-stop shop for service providers and enterprise customers," said Rob Arnold, analyst at Frost & Sullivan. "It also may allow Videxio to develop some truly differentiated capabilities compared to other video conferencing-as-a-service providers."

One potential complication: With Videxio's video conferencing platform added to its portfolio, Pexip risks competing with service providers that have built competing services using its software platform, Arnold said.

Partnership could rival Cisco video mesh

When it comes to video conferencing, enterprises want the scalability of the cloud but the reliability and security of an on-premises network.

The problem is, when companies deploy a pure-cloud video conferencing product like BlueJeans, all of that video traffic gets directed to the public internet. Pushing video to the web causes headaches for large enterprises, which tend to limit their internet connectivity for security reasons.

Cisco has led the way in developing a solution to this concern. It offers a product called Cisco video mesh that automatically balances video traffic between on-premises servers and the cloud based on each company's preferences.

Merging Pexip's on-premises software with Videxio's cloud-based video conferencing interface could help the combined company deliver a service similar to Cisco's, said Irwin Lazar, analyst at Nemertes Research, based in Mokena, Ill.

Roughly 41% of the 500 global businesses that responded to a Nemertes Research survey earlier this year said that keeping video traffic on-network was a "very important" or a "vital" feature in a web conferencing platform.

"The key differentiator for me is that they can bring the solutions to enable companies to keep video traffic on-net for performance reasons," Lazar said. "That's a big area of demand that we're seeing from IT leaders."

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