Avaya, RADVISION, and Desktop Video
Though the desktop market has been slow to develop, Avaya clearly thinks it needs to grab a piece of the pie.
The big news in UC this week comes from Avaya, who acquired video conferencing vendor RADVISION for $250 million, or roughly three times earnings. Avaya had previously dipped its toe in the video conferencing water, launching a video portfolio in conjunction with the launch of its Flare Desktop Video Device in the fall of 2010 in addition to its partnerships with LifeSize and Polycom to incorporate video into the Avaya portfolio of UC applications.
Video conferencing continues to be somewhat of an enigma in the UC space. Despite all the hype, we still see two different markets--the room/immersive telepresence space which enterprise IT leaders tell us they can't build out fast enough to meet demand; and the desktop space, which those same IT folks tell us they struggle to find demand or business cases to justify investment
The reality is that despite all the hype, IT leaders still aren't sold on the need for widespread deployment of desktop video conferencing capabilities. The majority of organizations (60%) will have deployed desktop video to 1-100 seats by the end of 2011, while only 12% will deploy to more than 1,000 seats. In terms of percentage of employees, 80% of companies that will deploy or are deploying desktop video are providing it to less than 10% of their users. Overall, about 34% of companies have deployed desktop video to at least some users, an increase of about 3% from 2010. We continue to hear many of the same concerns that have restricted widespread desktop video use over the years--bandwidth, performance, and lack of user demand, often due to the lack of ability to conference with those outside of the organization. IT architects say they fear the impact that desktop video will have on their networks due to the need to support a high-bandwidth application that also requires low latency and low jitter. Even worse, many IT leaders tell us employees simply aren’t asking for desktop video; preferring instead to rely on less-intrusive means of communication such as instant messaging; or just relying on video-enabled web conferencing to add video to a document sharing session rather than replacing phone calls or chats with 1:1 video calls.
But there are rumblings starting to come up to the surface. "I use Skype to video chat with my parents, why can't I have that same capability with my co-workers?" is something we hear more and more often as consumer video services become pervasive in the home and even on mobile devices, and a new, more video-friendly generation enters the workplace. So the growth potential for desktop video is enormous.
One area where we are seeing strong interest in desktop video conferencing is in integration of desktop with room systems, enabling individuals to join conferences from their desk without having to travel to the nearest room. Here RADVISION's MCU portfolio should allow Avaya to quickly integrate its Flare and one-X clients with not only RADVISION room systems, but those from its competitors including Cisco, LifeSize, and Polycom. We also see a small but growing number of companies where forward-thinking executives are leading the drive for desktop video. "Our CEO sees consumer demand driving internal demand. He wants us to use video to improve collaboration and has made desktop video deployment a strategic IT goal to improve productivity via better collaboration," said one director of IT for a global manufacturing company that is investing in desktop video in the belief that even though they can't currently quantify a direct benefit, ubiquitous employee video will improve collaboration and company performance.
So is Avaya’s move a reaction to Cisco's purchase of Tandberg, Logitech's purchase of LifeSize, Polycom's tilt toward Microsoft, and the rapid growth of new entrants such as Vidyo? Or does Avaya expect that the desktop video market will finally emerge and it wants a piece of the pie?
I'd vote the latter. Avaya continues to position itself as the one true end-to-end alternative to Cisco. With its acquisition of Nortel, Avaya has network infrastructure, voice, UC, video, and contact center as well as a large installed base of customers to sell to. And acquiring RADVISION gives it some measure of credibility in the video conferencing market, though a much smaller market share than Cisco got when it picked up Tandberg. The challenge for Avaya is to match the marketing engine of Cisco, while quickly integrating the RADVISION portfolio into not only its Aura architecture, but also its support and channel network. Meanwhile they will continue to need to fend off competition from Cisco, ShoreTel, Siemens, Vidyo, and others (including emerging hosted UC vendors) for the large base of Nortel customers, all the while getting ready for a likely IPO sometime in the not so distant future.