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Polycom's Death: Greatly Exaggerated Reports
At last week's worldwide partner conference in Vancouver, British Columbia, Polycom did not cite Samuel Langhorne Clemens' famous claim that "the reports of my death have been greatly exaggerated," nor did management give out copies of Richard Farina's 1966 novel "Been Down So Long it Looks Like Up to Me." Rather, Polycom's new CEO gave an honest-yet-upbeat picture of the company's prospects while senior management punctuated the message with depth and precision around hardware, software, solutions selling, and channel partner programs.
I'm a glass-is-half-empty kind of guy and haven't been on Polycom's most favored analyst list any time recently, but I came away from the event, which is called TEAM Polycom, with a new opinion of the company's prospects. Here are four reasons why:
People & Culture
CEO Peter Leav is only in his ninth week on the job, but already his down-to-earth, less aloof, yet serious and open attitude has infused the company. The sessions were less solipsistic, more partner-focused; less about how great Polycom is and more about how Polycom can help partners make money; less about product speeds and feeds and more about addressing customers' business needs.
The culture here is changing. Enthusiasm is rampant. New to the industry, Leav is setting a high-level professional attitude for sales, marketing, and engineering while pushing his team to strengthen channel partner relationships. At the same time, he seems to be digging in on operational expenses. For those who haven't been paying close attention, Polycom has gone on a spending spree over the past few years. Peter Leav brings in-depth experience in cutting costs while continuing to make smart investments with the savings. Indeed, that may be the reason he got the CEO job. Either way, it looks like it was a smart hiring decision.
New Positioning & Focus
Polycom has made much of its Microsoft partnership and its deep integration with Microsoft Lync. The Lync-compatible solutions (as well as the solutions for IBM, Unify, Broadsoft, etc.) are real, but the company went off the deep end a few years ago claiming it was a unified communications company. It isn't. And making such a claim did not help Polycom's credibility with customers, analysts, or Wall Street. Last year the company tried to reposition itself as a software company, creating only further confusion.
What I saw last week in Vancouver were some very innovative, not-yet-announced solutions that put Polycom clearly in the collaboration space. These new solutions are for data/content sharing. And there is a renewed focus on video content management (VCM). VCM encompasses recording, archiving, indexing, and streaming, a set of applications that are of increasing interest in verticals including employee recruiting, enterprise training, public and private education, town meetings, and legal.
Polycom botched its first foray into the streaming market a few years ago, but is set to re-launch around a solutions approach. Positioning the company as a collaboration company will be a very positive and believable step. Collaboration, after all, is really what people want (in the same way that what they want are holes, not drill bits).
Products have never been Polycom's problem. The company has always had competitive video conferencing endpoints and infrastructure, and this hasn't changed.
In Vancouver, the company demonstrated some amazing technologies in audio (noise detection algorithms that can significantly improve the conferencing experience), intelligent indexing that makes video archives useful, and new camera technologies that provide a "telepresence-like" user experience. True, product advantages have always been transitory in this industry as vendors continually leapfrog each other with price/performance/feature improvements, but these developments will prove to be significant in retaining customers.
In addition, Polycom has finally migrated all of its hardware-based video infrastructure products to software and to virtual-server-compatible implementations. So customers have a choice: hardware, software, or both (dubbed hybrid).
What makes this all the more interesting is Polycom's Platform Director product, which is being optimized for the virtual world with capabilities such as dynamic MCU spin-up for those environments where virtual machines are available. It turns out that transitioning from hardware to software is just the first step in the VM evolution, and Polycom is well on its way into the new world.
Real Presence 1 was announced at the conference, and while this is mostly a bundling of nine existing virtual software applications, RP1 simplifies the licensing and pricing models, thereby making the solution easier to sell and easier to buy.
Services has always been a tricky business in the video conferencing, unified communications, and collaboration market. Most vendors sell through channels, and most channel partners look at services as their own key to profits and customer retention. So when an equipment vendor gets into the services business, you have the classic definition of channel conflict--competing with your customers. This is usually a sign of impending vendor death. Nevertheless, almost all vendors walk this line with the usual mission statement that their services are sold through the channels, thereby providing channel partners with another opportunity, another tool in the toolkit.
With the July 2011 acquisition of HP's Halo operation, Polycom entered the video managed services business and began a direct relationship with about 400 customers. More recently, the company has quietly introduced Polycom-hosted-but-channel-partner-delivered VaaS services to compete with the likes of Blue Jeans, Videxio, Zoom, and others.
Color me surprised, but my conversations with multiple channel partners in Vancouver did not reveal any bad feelings about any of this. The partner strategy seems to be "sell channel partner services where it makes sense, and where it doesn't, re-sell Polycom services." Bottom line, though, is that the Polycom community is now equipped to sell the entire range of services needed by customers--beginning with professional services and installation, and continuing to ongoing maintenance, hosted, and managed services.
Putting It All Together
There's no doubt that the enthusiasm for personal and mobile visual collaboration solutions has put the future of conference rooms in doubt. Two Wainhouse Research surveys asking end users how their deployments of personal video will impact their interest in room systems lead to consistent, but ambiguous results. People really aren't sure.
In the meantime, given the macro-economic uncertainty and the technology shifts happening in the industry, customers are confused, cautious, and holding back. Wall Street has interpreted this as the death of video, undoubtedly an exaggeration. But the fact is, the market is down, if only slightly, and Polycom, as one of the leading vendors, is down ever so slightly with it. It almost looks like up.
If the video conferencing pendulum swings back to room systems, the area of traditional revenues and profits, Polycom has the products to compete. And if the market swings more towards infrastructure-centric cloud and VaaS, Polycom has scalable, virtualized solutions for both enterprises and service providers. Wrap all this in a collaboration focus and reinvigorated corporate culture, and the company is well-positioned for growth. The secret will be to drive the solutions message out to the sales force and channel partners, and ultimately the customers.
Andrew Davis leads the Video track at Enterprise Connect Orlando 2014. Check out the wealth of content he's put together!