Sanjeev Aggarwal's Blog

October 4, 2009

Could Video Conferencing become the SMB segment ‘Killer App’ ? At least Cisco thinks so with the Tandberg acquisition!

Good move by Cisco. The key beneficiary of Cisco’s acquisition of Tandberg will be the SMB and mid-market. Cisco already has video Telepresence solutions. However, these Telepresence solutions are primarily enterprise solutions – way beyond the affordability of the SMB (1-499 employees) or the mid-market enterprises (500-1000 employees). Both segments together are referred to as SMB in this blog.

The SMBs and vendors (that service this segment) are rapidly comprehending the business value and short-term ROI that Video Conferencing solutions offer. The global SMB video conferencing solutions and services market opportunity is around $150M in 2010 and forecasted to grow at an annual rate of around 9%. The SMB segment purpose built, cost effective, standards based solutions (from vendors like Tandberg and Polycom) coupled with rapidly declining prices of high throughput network bandwidth are now making the SMB video conferencing market very interesting.

In my 2 previous blogs, I have addresses the market opportunity for these solutions and vendors that provide solutions: Video Conferencing Solution – Now Affordable by the SMBs, SMB’s turning to Conferencing Solutions in tough economic times

Tandberg has an extensive video conferencing solutions family purpose built for the SMB market. With the introduction of the Quick Set C20 solutions, they have priced these solutions more in-line with what the SMB market can afford. What Tandberg lacked was a channel that could sell and service the SMB market – hence, not much of a installed base.

What does Tandberg bring to the Cisco-Tandberg party?

  • A complete set of video conferencing solutions for the SMB market that are standards based
    • Personal, desktop to conference room based video conferencing solutions
    • Desktop video conferencing phone with E20 and the MPX desktop solutions
    • PC based video conferencing with Movi
    • Conference room based solutions from standard def. to HD with the Quick Set C20
  • Almost no product overlap between Cisco and Tandberg in the SMB segment
  • The recent acquisition of Nortel Enterprise Div. by Avaya makes them the market leader in the SMB IP Communications segment. Cisco’s differentiation for these products was diminishing. Adding video conferencing to the Cisco product portfolio will provide the required differentiation.

What does Cisco bring to the Cisco-Tandberg party?

The Cisco/Tandberg pairing will open-up opportunities for Polycom to work with vendors such as Avaya, Nortel, HP (a Tandberg partners) – as they compete with Cisco in the SMB segment.

Cisco’s strength in integrating some of the SMB segment based acquisitions has been less than stellar, especially in the collaboration area. Acquisition such as WebEx, Jabber, PostPath have lost the momentum they once possessed before the Cisco acquisition. Hopefully Cisco will do a better job integrating Tandberg.

One private company (which is a partner of Tandberg) that will make a good acquisition target for Cisco is Broadsoft. They could provide Cisco the push and presence with the global service providers for hosted VoIP and Unified Communications solutions that Cisco currently lacks or are not much of a competitor.

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July 22, 2009

Avaya-Nortel will prove to be a formidable competitor for Cisco in the SMB Voice & Unified Communications Market

Filed under: avaya, Blogs - Sanjeev Aggarwal, Channels, Cisco, IP Communications, mid-market, nortel, SMB, SMB strategy, UC, unified communications, Voice Communications, VoIP — Tags: , , , , , , , , — sanjeevaggarwal @ 10:56 pm

Avaya will be runaway market share leader in the SMB and Mid-Market Voice Communications Segment with the purchase of Nortel Enterpriser Solution business

Avaya has been in heavy competition with Cisco for the SMB and Mid-Market Unified Communications market, with Cisco steadily gaining market share in the SMB IP-communication segment. However, the combined Avaya-Nortel will position them with roughly twice the market share in the worldwide SMB market – close to 30%, almost 2X of Cisco.

Sure there is product overlap between Avaya and Nortel SMB and mid-market products on the TDM and IP telephony side. However, the Nortel BCM product line is very strong and appealing to the SMB sector. Avaya has no products on the data networking side.

Avaya has been facing problems competing with Cisco on the IP-Telephony side, as Cisco can address both the IP-telephony side and the data networking product requirements of this market segment. Now that Nortel enterprise solutions include a strong data network portfolio – WLAN, secure routers, wireless access points, firewalls, etc.; Avaya will be able to offer a much more complete and competitive solution to the SMB market.

In addition to the products, Nortel will bring Avaya:

The current tough economic conditions have prompted SMB to somewhat slow-down the rate of migration from TDM to IP based voice communications and unified communication solutions. As the economy improves in 2010 and SMB’s again start to review their migration to IP-based solutions – the Avaya-Nortel combination will present a much stronger competitive front to Cisco.

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