I thought I would add my two cents to Eric Krapf's recent post regarding the news rumor that Silver Lake, the part owner of Avaya, will acquire Tandberg. Tandberg is the co-leader (Polycom has co-leader status) in the videoconferencing market that is suddenly heating up with the evolution of high definition, life-like telepresence solutions. My personal experience with videoconferencing dates back 30 years during my days with Western Union (remember them?) when videoconferencing was a primary application for leasing the company's Westar satellite transponder service. Executive-quality videoconferencing rooms back then started at about $1.5 million in current dollars. Today's offerings are a fraction of that cost and offer far superior service quality in terms of both voice and video transmission, not to mention multipoint and document collaboration services. Telepresence solutions today are the next best thing to being there.Cisco has been the most visible promoter of telepresence solutions, using its financial resources to buy airtime for commercials and product placement in television shows, but it is not the only market player (As a side note, Cisco's personal desktop videophone 7985G model is OEMed from Tandberg). Polycom has been highly associated with videoconferencing for many years and HP is also a prominent competitor of late for telepresence solutions. Mitel demoed its telepresence solution at its recent Forum in Las Vegas, the product designed and developed by Magor, a sister company owned by Mitel founder/owner Sir Terence Matthews. Tandberg is probably less well known to the North American general public, but has a long history in the video communications market and has substantial revenues. The company just reported financial earnings that exceeded analyst forecasts and can benefit from an association with a global leader in enterprise communications such as Avaya.
The key question that arises is whether Tandberg would be fully merged into the Avaya organization or remain an independent entity if Silver Lake, by itself or with partners, acquired the company. : The time and effort it took to absorb Tenovis, the German-based communications system supplier, far (far) exceeded early expectations. Besides organizational issues, a culture clash with Tandberg, a company with strong Norwegian roots, is a strong possibility. And does it make sense for Tandberg to be buried within the existing Avaya infrastructure as opposed to keeping it a separate entity?
Cisco's telepresence offering is not officially part of the company's Unified Communications unit, though it requires a Unified Communications Manager (UCM) desktop telephone instrument to operate. Tangentially, Alcatel-Lucent has kept its contact center Genesys Telecommunications Laboratories business operating independently from its enterprise voice communications system unit. Cisco's plans are to market and sell its telepresence offering to customers with voice communications from all suppliers; Genesys works closely with many of Alcatel-Lucent's voice system competitors, including Avaya, Cisco, Nortel, and Siemens.
It must be pointed out that many customers with voice systems from Cisco competitors still use Cisco networking equipment, and Genesys was a known market player in contact centers before it was acquired by Alcatel (one of the company's very few smart acquisitions). Avaya may arguably have the leading global market share for voice communications systems, but it is less than 15% of the enterprise customer market segment; the remaining large majority has competitive systems. If Tandberg is too closely identified with Avaya or is embedded within the Avaya organization it may limit potential sales to competitors' customers.
Everything discussed about Avaya and Tandberg is still speculation, because no one has officially confirmed an acquisition is close to being finalized. I think that the rumored $2 billion acquisition price may be on the high side, but can Silver Lake afford to have a strategic Avaya competitor acquire the telepresence supplier and not have it adversely affect its current stake in the voice-centric communications system company it purchased (along with TPG) for more than $8 billion? We shall see what happens as the days of Summer play out. The enterprise communications market is undergoing major seismic shifts and some will be helped and others hurt in the resulting quake.
