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SAN JOSE, Calif. -- Zoom has invested in a startup that manufactures video conferencing hardware exclusively for Zoom's cloud service, a move that threatens to strain the vendor's relationship with existing hardware partners like Poly and Logitech.
Zoom CEO Eric Yuan was involved early on in discussions regarding the formation of the new company, Neat, which publicly launched during Yuan's keynote at Zoomtopia 2019, the company's annual user conference.
In backing Neat, Zoom is helping launch a company that will directly compete with vendors like Poly and Logitech, which participate in Zoom's room system program.
"It is certainly a shot across the bow for all their hardware partners," said Zeus Kerravala, principal analyst at ZK Research.
Incorporated in the United States as Neatframe Inc., Neat has roughly 50 employees and is based in Oslo, Norway. Its founding was orchestrated by several veterans of the video conferencing industry, including OJ Winge and Simen Teigre.
Winge, Neat's chairman, is a former Cisco executive who held top roles at Acano and Tandberg, and Teigre, Neat's CEO, was a co-founder and onetime chief executive of Pexip. Yuan and Winge "discussed the loose concept for Neat numerous times" over the many years they have known each other, Zoom said.
Zoom was among the investors that provided $20 million in seed funding for Neat's launch. Zoom has a minority stake in the company, but the exact size of its investment has not been disclosed. Zoom has also let a California-based Neat employee work out of its San Jose headquarters on occasion.
Neat hardware coming soon
Neat plans to ship an all-in-one video conferencing device that natively runs Zoom in December. The company expects to launch a 65-inch touchscreen collaboration board in mid-2020.
By designing hardware only for Zoom, Neat hopes to gain an advantage over competitors that make hardware for multiple software vendors.
"We agreed with Zoom that we are focusing on them to make sure we are pushing the user experience innovation together with them," Winge said. "That's why we have aligned our roadmaps. And Zoom has dedicated both money, of course, in investing, but also resources to make sure this happens."
Zoom needs tightly integrated hardware to compete with Cisco, which offers all-in-one video systems designed to work with Webex Meetings.
"You get to have that Cisco level of hardware experience but with the Zoom level of software experience," said Rowan Trollope, an investor and advisor to Neat and the CEO of Five9. "That's been missing in the market, and that's the gap that Neat is filling."
Trollope led Cisco's collaboration technology group before leaving for Five9 in May 2018. He spearheaded the development of the Cisco Spark cloud messaging platform before it merged with the company's Webex online meeting product.
Neat will sell and ship Zoom devices directly to customers, rather than relying on resellers as most other enterprise hardware vendors do. That would simplify the procurement process for businesses and make it easy for Zoom to get directly involved in sales if it wanted to.
Zoom promises hardware neutrality
Zoom executives said they had not given Neat unparalleled access to the company's software or engineering teams. Rather, Neat designed its two initial products through the newly launched Zoom Appliance program, in which Poly and DTEN are also participating.
"There's nothing today that we've developed on the Zoom room application that would create some inherent advantage in one [device] versus another," said Jeff Smith, head of Zoom Rooms.
Zoom is working with select partners to create devices that run Zoom software without the need for an off-the-shelf computer and operating system. Zoom is also ensuring devices launched through the program are easy to install and can be managed through Zoom's admin portal.
Poly and DTEN unveiled products certified through the Zoom Appliance program at the conference. Poly showcased an all-in-one video bar for small and midsize conference rooms, while DTEN launched two touchscreen collaboration boards.
"It's an exciting time to be part of the video conferencing industry," said Tim Root, Poly's vice president of products, in a statement following the launch of Neat. "Our relationship with Zoom is stronger than ever, and we continue to focus on our goal of being the partner of choice for any and every cloud provider."