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Cisco Buys Tandberg, HP To Buy Polycom?

Posted on Thursday, Oct 1st 2009

There’s tremendous momentum in video conferencing right now, and I was sure Cisco was going to acquire either Polycom or Tandberg. Well, this morning, the news is that Cisco is acquiring Tandberg for $3 billion. This of course, puts Polycom in play in a big way, and the likelihood of HP acquiring them just went up exponentially.

From a prior post: “Gartner predicts that by 2012, video conferencing will replace 2.1 million airline seats per year, costing the travel industry $3.5 billion annually. Cisco’s revenue from WebEx was up 14% and TelePresence was up by 97%. According to Wainhouse Research, in Q109, Cisco sold 67% of the 520 TelePresence units sold worldwide, up from 51% of the 235 units sold a year ago, while HP’s share dropped from 11% to 10%. I am very excited to see the adoption of TelePresence and web/video conferencing in general. Remember my Forbes column, Kill The Business Trip, in which I called for this to happen a year ago?”

The Tandberg acquisition will nicely complement Cisco’s Telepresence and Webex strategies. And Polycom stock should move up as it becomes a precious acquisition target for Cisco’s competitors.

Chart for Polycom, Inc. (PLCM)=

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If Cisco can buy low-end Flip for the sourcing of content, then I am sure they will also be happy to enter the low-end video-conferencing box market. There is excellent transcoding s/w available already, slap it on commodity h/w, and then … “Homepresence” maybe ?

Srini Srinivasan Thursday, October 1, 2009 at 11:13 AM PT

CISCO is already foot stepping into low end video market with both appliance and software. Currently only available to the organizations like educational institutes and govt organizations. But soon it will be available to the mass market. CISCO is also aiming to foray into rural development JV with govt. where these applicance+s/w will play a pivital role.

Chiradiip Mandal Thursday, October 1, 2009 at 11:11 PM PT

TelePresence will decrease the travel expenses in a drastical way. Replacing 3 % of the business trips (airplanetravel) by TelePresence has a major impact on our carbon footprint.
The evolution of hard- and software was favorable for the overall quality, but we still miss the ‘real human touch’ – the eye-contact. This feature – as in Teleportel’s TPT50 – is ‘really’ enhancing the communication between the users.

Franky Rogiers Thursday, October 1, 2009 at 11:15 PM PT

This acquisition made sense for Cisco because of its TelePresence and Cisco needed a product at the mid tier level. While HP also sells video conferencing solutions, they have not been aggressive enough compared to Cisco. My blog post : http://subbaiyer.wordpress.com/2009/10/02/ciscos-brilliant-acquisition-of-tandberg/ gives my take of the acquisition.

Subbaraman Iyer Friday, October 2, 2009 at 7:51 AM PT

This deal is significant, but not all sunshine for Cisco customers. Cisco didn’t want to acquire Tandberg, they had to. They gambled that they could steamroll the video conferencing market with a proprietary solution and become the new standard (see Chambers comments in Informationweek article from early 2009 about Cisco 2.0). Well, that failed because customers were demanding interoperability. I am reading a lot how the Tandberg acquisition helps Cisco at the mid-tier level. Most readers probably aren’t aware but Tandberg has high-end products that will compete with Cisco’s offerings (namely Tandberg T3). The Tandberg MCU also competes with what Cisco customers have been buying to date, which is Radvision’s MCU. This means Cisco Telepresence customers will either be require to replace/upgrade existing systems or buy MORE infrastructure gear to make it all work. That scenario will never provide the same level of quality as native interoperability. Either way, there will be issues for customers from Cisco’s failed attempt to lock up this market with a proprietary solution.

EdTicket Friday, October 9, 2009 at 1:01 PM PT
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