Polycom needs to prove it can leverage its deals with HP and Microsoft before it can challenge Cisco, according to analysts.
Polycom's $89 million purchase of Hewlett-Packard's video collaboration
business, including its Halo telepresence products, gives it significantly more
ammunition in its growing competition with Cisco Systems.
Polycom will need to leverage that investment, as well as its expanded
partnership with Microsoft and membership in the new OVCC (Open Visual
Communications Consortium), to not only grow its business but to differentiate
itself from Cisco, which currently owns about 47 percent of the telepresence
market and was successful in staving off HP's efforts in the space.
are taking a wait-and-see approach to Polycom and its new-found video
these announcements will create a great short-term opportunity, it's not a
given that Polycom will be able to create long-term differentiation," Yankee
Group analyst Zeus
Kerravala said in a blog post
. "Historically, Polycom has been great
on executing on tactical, short-term opportunities, but it's never managed to
think about how to make video part of the DNA
of its corporate customers. Meanwhile, Cisco has made video the main focal
point for its entire collaboration strategy. So great short-term moves for
Polycom ... and to Cisco, it's game on."
a Webcast press conference June 1, Polycom CEO Andrew Miller spoke of the
capabilities his company is inheriting through the acquisition
of HP's video collaboration business
, which will include not only the Halo
telepresence products but also managed services. Miller also talked about
Polycom's aggressive push for partnerships and the drive to create greater
interoperability and openness in the video communications business.
deal for HP's video collaboration business is expected to close in the third
those partnerships and what Polycom will gain from them that will be more
beneficial to the company than any HP Halo products, Roopam Jain, an analyst
with Frost & Sullivan, said in an email to eWEEK. Polycom already has
telepresence and video collaboration products, Jain said. However, through its
strategic relationship with HP-in which Polycom becomes HP's exclusive provider
for telepresence technology-Polycom will gain access to a wider customer base,
a larger distribution channel and big sales team. In addition, Polycom will be
bringing its telepresence and video collaboration technology to HP's webOS
platform, which will include PCs, laptops, smartphones and tablets.
addition, HP CEO Leo Apotheker, at the D9 conference June 1, said HP was
looking into licensing webOS to other vendors.
is a hot topic and the most exciting developments in collaboration are coming
to mobile devices," Jain said.
HP's support to the expanded relationship with Microsoft and the partnerships
with the various service providers-including AT&T, Verizon, Orange Business
Services, BT Conferencing and Global Crossing-and Polycom has some formidable
allies, she said.
Polycom's competition has to worry about is how to counteract an even more
powerful Polycom," Jain said. "Polycom has been gaining a lot of momentum in
recent months and has already benefited significantly from a growing ecosystem
of partners, particularly Microsoft. This announcement creates another strong
partner for them. The HP-Microsoft-Polycom triangle of partnership could mean
huge challenges for Polycom's competitors."
Dewing, an analyst with Forrester Research, agreed, but said the onus now is on
Polycom executives to make all this work to its advantage.
is joining the march of vendors betting on the improved collaboration made
possible by video-and adding its own twist by focusing on platforms and
interfaces that enable the cloud services that will deliver intercompany,
cross-carrier solutions in a way that will enable service providers of all
types to profitably participate in the market," Dewing
said in a blog post
. "If Polycom can take the lead in offering open
interoperable services, it can hurt Cisco in its core business. However, it is
not clear that this set of announcements and relationships can deliver more
open interoperability than the legacy Codian technologies that Cisco owns and
markets through a long list of service providers today, giving Cisco an
advantage until Polycom can prove
that its solutions are more open."
Miller and other executives have said that their open approach, partnerships
and focus on standards and interoperability will be a key differentiator for
Polycom going forward. They look at Cisco's offering as a more closed,
proprietary environment-though Miller said he hoped Cisco would join the OVCC.
However, Cisco officials said that their success in the video collaboration
space over the past few years is proof positive that their approach makes sense
in the market.
just under five years, Cisco has gone from zero to 47 percent telepresence
market share while HP has failed to build any credible presence in collaboration,"
David Hsieh, vice president of TelePresence marketing, said in an email.
"Regardless of the vendor, innovation and a commitment to customers are
critical for success in this rapidly growing collaboration space, and Cisco's
strategy to offer customers one of the largest portfolios of interoperable
telepresence solutions for their unique needs is paying off."
the rest of the industry, Polycom's moves are an indication that more changes
are in the offing. Yankee Group's Kerravala noted that after Cisco closed its
$3.3 billion for video conferencing rival
last year, speculation was rampant that Polycom would be the next
takeover target, with HP and Dell among the list of potential
purchasers. Polycom's HP deal changes things around a bit.
the past few years, Polycom has allowed Cisco to be the primary evangelist for
corporate video and seemed content to ride the wave Cisco has created," he
wrote. "Polycom now has strategic relationships with two of the largest IT
vendors (HP and Microsoft) as well as developing relationships with network
service providers, which has typically been an area of exclusivity for Cisco."
smaller vendors-such as Mitel, ShoreTel and Vidyo (which last year announced a partnership
)-the deal could trigger more interest in them, according to Frost
& Sullivan's Jain.
is becoming key to all communication vendors' portfolio," she said. "We expect
to see more consolidation in this market."