Polycom the Private: What to Expect When You're Expecting
Polycom last week held its annual industry analyst and customer events, the first since being acquired by private equity firm Siris Capital Group and bringing on Mary McDowell as CEO. A new owner and CEO can only mean one thing -- change is in the air -- and the events offered the perfect opportunity for interacting with top customers and executives and coming to an understanding of what Polycom of the future could look like.
Here are three expectations I have for Polycom as it moves forward as a private company:
Alignment with Other Siris Companies
The first and most obvious benefit of private equity ownership is integration with other portfolio companies -- most notably in this case, UC&C provider PGi. One of Polycom's strengths is integrating its solutions with ecosystem partners, and I would expect to see interoperability and possibly joint development between these two companies.
However, the more interesting play would be with Modality Systems, which PGi acquired in early 2015. Modality is one of the better services firms dedicated to Microsoft Skype for Business, with dozens of Skype for Business-certified engineers on staff. Polycom, in the meantime, has deeper and broader interoperability with Skype for Business than does any other vendor. Given the complexity of deploying Skype for Business, the two companies should put together a turnkey service to deliver a Polycom-Microsoft solution.
Another opportunity is with Skype for Business-to-Skype for Business Online migrations. I've talked to many companies, including some at last week's customer event, that are struggling with the migration from the on-premises to the cloud version of Microsoft's UC platform. Modality and Polycom could develop a services lead approach, using Polycom technology to help companies with this shift.
Expect to see Polycom partner with PGi and its services firm, Modality.
Faster, Broader Product Innovation
Winners in the digital era move with speed, something that Polycom has not exceled at traditionally but has been better at as of late. The improvement is in part due to the efforts of Michael Frendo, EVP of worldwide engineering at Polycom, and his team. Engineering has worked hard over the past couple of years to consolidate from multiple codebases into a single codebase, removing a significant hurdle standing in the way of the company's ability to move faster. A single codebase means Polycom can drop new features, like auto-mute, into every product at the same time, in turn giving customers more consistent experiences across the portfolio.
Also, going private means the company can time its product releases without having to worry about their impact on the quarter or fiscal year. Public companies need to factor in how a new product might impact sales within the quarter. So, the Polycom of old may have delayed a release to minimize business disruption if it thought the release would elongate the sales cycle. Absent its public shackles, Polycom can be more aggressive with its release timelines.
Expect to see more products from Polycom, faster.
Expansion into Market Adjacencies
Since its inception, the majority of Polycom revenue has come from selling voice and video hardware into conference rooms. But as businesses become increasingly distributed, and more workers want to collaborate at their desks as well as in meeting rooms, Polycom needs to adjust its product strategy to capture more of this opportunity. The key to this lies in the cloud.
I don't believe Polycom will roll out its own UC- or video-as-a-service offerings, since it has great relationships with the likes of Vonage, RingCentral, and 8x8. However, I do expect to see Polycom work with Internet telephony service providers (ITSPs) to find a way to make video a more standardized offering. This would enable Polycom and ITSPs to expand their total addressable markets.
I also believe that meeting rooms come with a significant upside. Many businesses today are trying to meet the needs of a quad generational workforce (Baby Boomer, Gen X, Millennial, Gen Z), and this requires building a variety of workspaces, including meeting rooms, huddle rooms, open spaces, personal workspaces, and others. In theory, each of these should have its own voice, video, and content-sharing capabilities. Addressing all of these use cases is a multifaceted problem that involves product, channel training, and new ecosystem partners.
Also, building a meeting room involves more than just putting a display, camera, and phone in the space. The room requires lights, badge readers, HVAC, blinds, and many other things that. Polycom has positioned its RealPresence Trio collaboration hub as the control point of a meeting room. Right now, Trio only controls the communication tools, but I see no reason why workers couldn't close blinds, turn lights off/on, or turn on the air conditioning through the hub. Polycom should be partnering with companies like Philips so network-connected LED lights are manageable through a Trio, for example. Greater control over the entire meeting space would also move Polycom into the Internet of Things, massively expanding its total addressable market.
Expect to see Polycom deliver new solutions through ITSPs and develop an IoT/smart building story.
Polycom's revenue has been in decline for a number of years. The fact that both Mitel and Siris were interested in the company is a testament to the quality of the products, high customer satisfaction, and market opportunity. However, being publicly traded put many constraints on what the company could or could not do. The acquisition by Siris appears to be well timed, as collaboration technology has become a critical component of workplace and customer experience transformation. Because of that, your expectations for Polycom should be high, as are mine.