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.
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?
Cisco has a large installed-base in the SMB market with its dominant presence in the SMB network, security, and VoIP/UC market. They have the largest installed base of VoIP end-points.
Cisco has an extensive and very loyal SMB focused channel made up of a who’s who of distributors and VARs.
Cisco has global market presence in the SMB market.
Although Cisco is not the low-priced solution, they are well-known for as a high-quality solutions provider; Tandberg has similar product positioning in the SMB segment
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.
As the on-premise systems now support reservationless On-demand conferencing, they let employees hold impromptu meeting, without pre-scheduling these meetings – allowing them to collaborate when they need to, with whomever they need to, provided both parties have access to compatible video conferencing systems.
Vendors are recognizing the market opportunity and value of video conferencing solutions for the SMB market and are making available systems that are affordable and easy-to-install/ use/manage because SMBs typically don’t have the IT staff to support these solution. In some instances these solutions can be managed remotely by VARs and service providers. However, they are still a ways away from a price that will explode mainstream adoption in the global SMB markets.
Video conferencing solutions fall in three broad categories:
Top Tier of Telepresence solution at corporate locations to communicate with key accounts for executive management that support high-def.
Tier 2 small conference room solutions for teams/workgroup meetings and training sessions (low-end support standard def. and high-end support hig-def.)
Tier 3 of personal integrated or desktop system for more regular 1:1 communication sessions. These personal integrated web/video conferencing systems (which are point and click and only need a web cam or desktop systems (with integrated audio, video and content sharing capabilities).
Video conferencing solutions vendors are now developing products and solutions designed specifically for the SMB and mid-market. These systems are easy-to-use and priced appropriately for this market segment. Polycom’s QDX6000 system is now available for under $4,000. The QDX6000 is a full featured SMB product that offers high resolution DVD quality video room-based video conferencing solution that has low-bandwidth requirements. A these price points, SMBs can pay for the systems by reducing travel expenses – reduction of 2-3 business trips can now pay for these solutions providing short-term ROI.
Video conferencing solutions are leading to more frequent meetings between distributed workers (and in several cases with outsourcing partners), and providing improved productivity by speeding product development by helping teams triage and resolve problems faster. This is especially true for SMBs that sales and development office in the U.S., outsourced software development locations in India, and outsourced manufacturing in China and Latin America.
– Horizontally across all mid-market companies’ sales, marketing, training (for distributed employees, partners, and customers), recruitment, and product development are the key application segments. Vertical industries including financial services, professional services, technology, manufacturing, healthcare, oil and gas, law, entertainment and education are among the top adopters of video conferencing solutions. New applications for video conferencing are being launched with greater frequency as deployment increases; increases in travel costs are prompting SMBs to interview potential employees as this allows one to interact virtually face-to-face as if you were in the same room regardless of geographic locations and time zone differences.
– Polycom, Tandberg, Lifesize, and Vidyo are the top SMB video conferencing solution vendor. Polycom is the leading video conferencing solutions vendor. On a global basis Polycom is shipping about 10,000 video conferencing systems, with a large number of them now going into the SMB segment. Tandberg is another front-runner providing comprehensive video conferencing that is increasing focus and products targeted at the SMB segment.
– SMBs don’t have internal IT staff expertise to setup on-premise video conferencing systems. Increasingly they are turning to VARs and service providers that specialize in video conferencing services and rentals like WireOne Communications and Intercall to help setup and remotely support these systems. Video service providers enable rich media communications by providing IP network services optimized for videoconferencing traffic by providing dedicated MPLS-based IP networks that handle voice, video, and data on a single network with quality of service (QoS) built in to support the more rigorous needs of these solutions.
In today’s tough economic times, driven by higher travel costs, staff reduction, and tight credit – SMB are turning to solutions that will reduce costs and provide clearly identifiable short-term ROI. In the past year, conferencing solutions service providers that provide hosted audio and integrated web/video conferencing services are experiencing dramatic increases in adoption of these services among SMBs and mid-market enterprises. Not only are more SMBs adopting these solutions, the existing users of these solutions are also using these solutions more often.
Audio Conferencing (leading vendors – Intercall, ATT, Verizon ,IP-PBX and hosted VoIP vendors):
Distributed workforce conference calls
Improve employee collaboration and productivity
Support for mobility, don’t need to be in front of screen for conference
No need to be at desktop, works well when on the road
Integration of VoIP solutions reduces costs by reducing call toll charges
Increased adoption of podcasts
Web Conferencing (leading vendors – Cisco/WebEx, Microsoft LiveMeeting, Citrix OnLine Go-To-Meeting, IBM Sametime Unyte and Lotus SameTime):
Save travel costs and participant time
Support revenue generation activities
Availability of hosted service with pay-as-you-go
Ability to host impromptu meetings
Improve employee collaboration & productivity
Better support a global distributed workforce
Improve organizations efficiency
Better communication and collaboration between employees, customers, partners, suppliers
Fewer number of experts become more productive by scaling knowledge
Video Conferencing (leading vendors – Polycom, Tandberg,Lifesize,Cisco/Webex,IBM):
Save travel costs and meeting expenses
Need to interconnect distributed branch
Better and more interactive communication and collaboration between employees
Ability to utilize off-the-shelf video cameras and headsets
Availability of affordable web and on-premise based solutions
Increased bandwidth availability
Increased adoption of rich media communications – video
Better interaction with outsourcing partners
Fewer number of experts become more productive by scaling knowledge
This bodes well for the vendors, VAR’s and service providers involved with selling these conferencing solutions. However, businesses need to be careful when selecting a vendor. Stability and financial viability of vendors/service providers becomes more important in the current economic climate, as startups feel the squeeze.