My morning of June 1st started off with a bunch of news from Polycom. Here are the key highlights:
* Polycom has acquired the visual collaboration business unit from HP for a reported $89 million. This includes the Halo product as well as the managed services associated with it. As part of this, Polycom will be the exclusive video partner of HP, and it will include Polycom providing video applications for the HP WebOS devices, which include the Palm based TouchPad.
* Polycom launched the Open Visual Consortium to drive more B2B and B2C use of video. The consortium will be an open video exchange cloud with a number of service providers including GlowPoint, which has its own open video cloud.
* Microsoft announced an expansion of its strategic partnership with Polycom. One of the items in the press release was that the companies would be announcing two new joint products, but no details of these were given at the time of press release.
I'll go through the announcements one by one and give my thoughts and then the impact to other vendors in the space.
Polycom: Polycom acquires HALO and the video collaboration business.
Buying the HALO business didn't make a lot of sense to me. While HP was the first solution provider to offer a Telepresence service, it never really had any broad appeal. The solution had a high price tag of $550,000 per room and a monthly fee of $18,000, so there are certainly more cost-effective solutions on the market today. Additionally, Cisco has had a targeted effort to replace HALO and has won some of the early adopters of HALO such as Pepsi and Procter and Gamble. I'm actually surprised that HP managed to get $89 million for the business unit but my speculation is that Polycom had to take HALO as part of the larger agreement. My guess is that Polycom will kill HALO as soon as they can and replace the systems with RPX systems before Cisco jumps all over the remaining customer base.
There are two other significant portions of this announcement. The first part is that HP will resell Polycom exclusively as its video solution. Obviously having HP as a channel partner is fantastic for Polycom, but HP had been shifting more of its business that way ever since Cisco bought Tandberg. The last part is that Polycom will provide video applications for the upcoming Palm-based devices. The short-term opportunity here is very limited as most of the tablet demand is with Apple, Android and to a lesser extent, Blackberry tablets.
The Open Visual Consortium
The concept of the consortium is great, and something like this is needed to drive broader B2B adoption. However, this has been tried before. GlowPoint has a great open video exchange and Cisco has been pushing their B2B service for a couple of years now. Between the two initiatives I still give the edge to Cisco based on the demand they can create directly with enterprises.
Polycom expands its relationship with Microsoft
There weren't many details given here other than that the two companies were working on two "groundbreaking" products. Andrew Davis pointed out in his blog that he believes the two companies are working on a Lync based room system. That's moderately interesting but I would hardly put that into the "groundbreaking" category.
HP:
Shedding the video business should do a few things for HP. First, it should put to rest the idea that HP will acquire Polycom or another Unified Communications vendor such as Avaya, ShoreTel or Mitel. It's a curious move given the obsession HP has with Cisco. The end-to-end voice, video and data solution provides Cisco an advantage over much of the industry and HP certainly had the resources to replicate it. The fact remains, though, that HP was never really able to capitalize on the market they created and that Cisco ran away with later. Shedding this business won't solve all of HP's problems but it's clearly shifting its business to core areas.
Cisco:
The moves Polycom made certainly help close the gap between itself and Cisco, but Cisco has a far broader portfolio than Polycom still. Cisco has Telepresence Exchange, CTX, Callway, Webex video and Cius coming. Cisco had done more to promote and evangelize video in the past two years than Polycom was able to do the entire decade before. The Microsoft-HP-Polycom trinity certainly has the potential to cause Cisco some challenges, but partnerships can be difficult to execute on. Microsoft and HP both have significant challenges as they transform, so it's unclear as to how much focus they can really devote to video.
In summary, Polycom has enjoyed a great ride since Andrew Miller took over as CEO, but I would contend that much of the growth they have enjoyed was riding the rising tide that Cisco created. Polycom did a great job of creating a rallying cry to the industry of "If you hate Cisco like we hate Cisco, come work with us" when Tandberg was acquired, but they do lag behind Cisco in product and vision.
Polycom created a lot of noise with the series of announcements and now it's time to execute.
