Antitrust regulators on both sides of the Atlantic have granted approval to Cisco's $3.4 billion deal for telepresence competitor Tandberg. At the same time, Cisco announced its biggest TelePresence deal, with Bank of America agreeing to buy 200 units.
Cisco Systems cleared the final major hurdles in its bid to acquire rival
Tandberg when regulators both in the United
States and Europe
approved the deal March 29.
The concerns raised by the U.S. Department of Justice and the
European Commission-the antitrust arm of the European Union-centered around
issues of the impact the $3.4 billion deal would have on the competitive
landscape and interoperability between Cisco video collaboration products and
those of rivals.
Cisco officials expect the deal to close in the next few weeks.
Both Cisco and Tandberg
which has dual headquarters in the United States
and Norway, are
major players in the immersive video collaboration space known as telepresence.
The high-definition video collaboration technology simulates face-to-face
meetings, and Cisco officials see it as a major part of their larger
collaboration strategy going forward.
DOJ officials said that after analyzing the deal, the belief
was that anti-competitive concerns around the acquisition on the video
collaboration space were lessened because of the evolving nature of the
telepresence market and promises around interoperability Cisco officials made
to European regulators.
Key among the promises was Cisco's agreement to divest itself
of the TIP
(TelePresence Interoperability Protocol)
standard the company created to
enhance interoperability between Cisco's TelePresence technology and immersive
collaboration products from competitors.
"The remedies package offered by Cisco is suitable to
safeguard competition in the market for video communications where the merged
entity will have a strong presence," EC Vice President for Competition
Joaqu??Ãn Almunia said in a statement.
Christine Varney, assistant attorney general in charge of the
DOJ's Antitrust Division, praised the joint efforts of U.S.
and European regulators on the investigation.
Marthin De Beer, senior vice president of Cisco's Emerging
Technologies Business Group, said interoperability is the key for growing the
"Our commitments will promote multivendor interoperability
and contribute to the ubiquity of video communications, which will benefit
customers, competitors and the industry as a whole," De Beer said in a
Cisco introduced its TelePresence products five years ago, and
that business has grown to include about 600 global customers, and revenue
could grow to about $1 billion or more once Tandberg is in the fold, Chuck
Stucki, vice president and general manager of Cisco's TelePresence business,
said in a recent interview in Cisco's Boston
offices. Stucki said the worldwide market could grow from $3 billion this year
to $10 billion over the next five to seven years.
Cisco's had a strong presence in the enterprise space, and the
will give it greater traction among SMBs and expand
the reach of TelePresence from the desktop to the largest corporate rooms. It
also will give it more ammunition against a growing legion of competitors,
including Hewlett-Packard and Logitech, which late last year bought LifeSize
Cisco already has begun its push for greater interoperability.
The company in January announced it was releasing the TIP into the public
domain, licensing it to other telepresence and video conferencing vendors,
including Tandberg, LifeSize and Radvision. Officials also said they planned to
bring the protocol to an industry standards body with hopes of creating an open
However, Polycom officials said they had no intention of
signing onto the TIP effort, saying a dominant player in a particular market
shouldn't be the driving force behind an interoperability standard. That job is
best left to third-party bodies, they said.
Polycom and HP at the VoiceCon 2010 show March 22 announced an
extended partnership around UC (unified communications). HP will sell Polycom's
portfolio of voice and video conferencing, and Polycom's telepresence and video
conferencing products will interoperate with HP's Halo telepresence solution.
The demand for interoperability will grow as more businesses
look to video conferencing and telepresence to help save on travel costs. Cisco
has used TelePresence, and officials have said they have reduced annual travel
costs from $750 million to $350 million.
In addition, Cisco is aggressively expanding the reach of its
TelePresence products, including tighter integration with other Cisco
collaboration products, such as WebEx.
Cisco's Stucki also said Cisco is moving the TelePresence business
in multiple directions, finding interest in such areas as telecommunications
and education, and looking to push it into home offices and living rooms.
The regulatory approvals for the Tandberg deal came the same
day Cisco announced its largest TelePresence deal to date. Bank of America will
have 200 units installed in various offices around the globe by the end of
2010. The bank currently uses 28 TelePresence systems for meetings and
The combination of the positive news on the Tandberg front and
the Bank of America deal illustrates the strength of video collaboration going
forward, according to Brian White, an analyst with Ticonderoga Securities.
"This progress is part of Cisco's pursuit of the collaboration
transition that is estimated by the company at approximately $34 billion,"
White wrote in a research note March 29. The Bank of America deal "is an
impressive win in our view and highlights an inflection point in the video
collaboration market as companies are searching for solutions to become more
efficient through collaboration and video technology."