I had a chance just now to talk with Andrew Davis, senior partner at Wainhouse Research, about Cisco's acquisition of Tandberg. Andrew's probably the leading analyst in the videoconferencing business, and his bottom line was: "This acquisition validates Cisco's vision. It also is acknowlegement that their strategy of the past two years was a failure. The Telepresence strategy was flawed."What Andrew means is that Cisco's success came in terms of making video an important part of Unified Communications, and focusing enterprises on the possibilities of IP-based video. In that way, the acquisition represents Cisco's potential to leapfrog the other UC vendors and offer an "end to end video strategy" (i.e., desktop through telepresence) as part of its UC portfolio.
On the other hand, Andrew said, the purchase of Tandberg also represents an admission that Cisco couldn't go it alone with the strategy upon which it had embarked--i.e., a strategy that relied on high-end video and very little concession to interoperability among different vendor systems. Had Cisco believed it could continue on a relatively proprietary path, it simply would have pushed forward, Andrew said.
Instead, in this morning's briefing on the deal, Cisco CEO John Chambers and Tandberg CEO Fredrik Halvrosen, "the word interop was mentioned 50 times," Andrew said, indicating that Cisco may have seen the light on interoperability.
With Tandberg, Cisco gets not only an "extremely broad" product line, but a "really, very strong engineering team," Davis said.
As far as the deal's impact on the UC and video markets, Andrew said, "I think this changes the competitive space on many fronts."
"This is the first UC player of any significance to actually make a serious investment in video," he added.
Though he didn't say an Avaya-Polycom marriage must necessarily follow, Davis did say that Avaya will need a competitive end to end video play to compete with Cisco if the Tandberg acquisition succeeds in driving video.
I asked Andrew whether he thinks that Microsoft believes it has what it needs to compete with Cisco in UC video--given Microsoft's focus on the desktop, to the exclusion of room-based systems. "I think they think they have what they need," Andrew said. "Do I think they have what they need? No."
At the same time, though, Davis said Microsoft just doesn't seem interested in being in the hardware business. "Microsoft sees the opportunity to sell desktop [video] solutions in the millions. Millions," Andrew said. In contrast, room sales would be in the "thousands.... So it's not that interesting an opportunity" to Microsoft, he said.
The most immediate result of the Cisco-Tandberg deal may be a few months of market overhang, as customers wait for the deal to close (which execs say could take 6-8 months), Andrew said.
