For Polycom, It's Time to Execute
The company now has the right products, some low hanging fruit with Lync and a channel that's motivated to capitalize--so all it needs to do is execute.
Last week I attended Polycom's TEAM conference, that is, its global sales and partner conference in one of my favorite cities, Vancouver, BC. In addition to being home of the Vancouver Canucks, Vancouver is where many Canadians feel the sun, the sky and the earth all come together. One can golf in the morning under a beautiful sunny sky then go night skiing on one of the local mountains. It all comes together in Vancouver. So it's fitting that this be the venue that Polycom kicks off its next chapter, as its new product, channel and go-to-market strategies come together.
The conference kicked off with a video of CEO Andy Miller and other musically talented Polycomers singing "It's our time" to the theme of ZZ Top's "Sharp Dressed Man". The title of the song, "It's our time" was the theme of the Polycom TEAM Event, pointing to the fact that this is indeed the time for Polycom and its channel to grab some market momentum. I thought the theme of "It's our time" for Polycom was well thought out, as the company has gone through a number of changes during the Andy Miller tenure and it should be time to capitalize on this. Looking ahead, the following trends should allow Polycom to outpace the market growth.
The Microsoft Lync wave. Barring some unforeseen grave mis-execution on Microsoft's part, this should be the year the Lync legitimizes itself as an enterprise voice player. I ran a survey with Tech Target towards the end of 2012 and Microsoft trailed only Cisco in brand preference. Microsoft and Polycom have co-developed many products, and Polycom is the only video vendor that not only interoperates with Lync but is fully interoperable. All the others--Cisco, Vidyo, Lifesize, etc.--require some kind of gateway, software, etc. to work with Lync. This is a unique advantage Polycom should be able to leverage.
A change in channel. Historically, Polycom has lived off of traditional audio/visual resellers to drive the business. Diversifying the channel has been a main focus of Polycom during the Miller tenure and it's something I had been skeptical of. However, at TEAM I met with a number of larger system integrators--certainly not your average A/V guys--that were building a practice around Polycom, and there were a couple of reasons why.
The first is the Lync opportunity that I mentioned above. While all of the companies I talked to had a thriving Cisco business, the increased interest in Lync has caught the attention of SIs, data VARs and any reseller with a UC business. Polycom's native integration makes the job of the Lync reseller much easier.
Also, and this might be a bigger factor than Lync, Polycom has become a much more channel-friendly company, particularly when it comes to telcos and global SIs. In years past I almost felt that the company had so much business coming in through the A/V channel there was no need to expand its channel. That attitude has changed now and we're starting to see the Polycom channel go through a significant shift.
New products. At its technology day in late 2012, Polycom announced more new product in that day than what it had the entire previous year. The announcements included everything from lower-end products to software-only products to virtual platforms. Last year, the company also outlined its cloud strategy and gave a preview of its upcoming "Cloud Axis" platform. Polycom, like so many other communication companies, has lived and died with the hardware sale, but this industry is undergoing a transition to cloud and software, and Polycom's product roadmap is now in alignment with the industry.
The company now has the right products, some low hanging fruit with Lync and a channel that's motivated to capitalize--so all it needs to do is execute. One of the keys to executing is what it does with its emerging consulting services business. Polycom currently makes about 75% of its services revenue on maintenance business and another 15% or so on license revenue, with only about 10% on consulting services. The company has been hiring in this area and recently acquired Sentri to bolster itself.
As video continues to mature, it becomes important to help customers to understand how to embed video into business process and corporate applications. Expecting the channel and customers to understand this isn't realistic, so Polycom needs the professional services group to lead video sales. At the TEAM event, Polycom was crystal clear that the burgeoning services business is there to move the video industry forward and to aid its channel into selling larger, higher-margin deals, and not to compete with its channel.
Also, I still sense there is a fair amount of "legacy" mindset at Polycom that could impede the company's ability to capitalize on the upcoming opportunity--but the legacy does seem to be diminishing. Capitalizing on market transitions requires a company to be "all in". Polycom appears to be all in here, but only time will tell whether the company can make the tough decisions on product and people to execute.