Video, video and more video—that’s been one of the big themes in the communications and collaboration market for the back half of 2009 and will continue to be hot moving into 2010. Over past month, we’ve seen Cisco make a bid to acquire Tandberg to bolster its video strategy, videoconference as a major theme at the Fall09 VoiceCon, Cisco describe video as “stream that runs through all of Cisco” at its annual collaboration summit and now the Logitech news. For those who have not heard of Lifesize, the company came to market as a competitor in the flourishing telepresence market but lately has focused on HD videoconferencing and teleworker solutions. For the most part, Lifesize offers solutions that are much lower cost than the “name brand” vendors like Cisco, Tandberg and Polycom.
On the surface, plunking down $405 million in cash for a company that’s expected to do $90 million in 2009 might seem kind of steep but Lifesize is expected to grow in the neighborhood of 50 percent this year, so the potential to make the investment back fairly quickly is there. Additionally, the corporate videoconferencing market has been hot lately because of companies cutting travel costs, increased focus on collaboration, green compliance and overall easier to use systems. Yankee Group estimates the videoconferencing market to be approximately $2 billion in 2009 and grow 15 to 18 percent in 2010, so a high growth market for Logitech to leverage Lifesize.
Most people know Logitech as the company that makes PC peripherals such as the computer mouse, keyboards or desktop webcams—all necessary things but not exactly synergistic with high end corporate videoconferencing. Its decision to move into the corporate videoconferencing market does seem out of place but shouldn’t be a total surprise. One of the big trends that Yankee Group has been following is the rapid consumerization of the enterprise, and as this happens and more workers work remotely, video will begin to cut deeper across our personal and professional lives. Long term this trend will allow Logitech to bring much of the focus it has on consumer design and ease of use to the videoconferencing market and create an effective go to market strategy but, in the short term, it will likely run these as separate businesses.
I think this is a leading indicator of what’s to come for what was a niche market. Today, there are still a lot of problems but many of the barriers are starting to fall. The systems are easier to use, the vendors are focusing on interoperability between one another (took them long enough) and we’re starting to see some focus on intercompany videoconferencing (see my blog from earlier this week). All of these will contribute to videoconferencing being a “rising tide” that will lift all the boats in the market. Cisco has made its play, HP has moved its Halo product into its TSG (technology solutions group) and we’re expecting even more activity in this market. Tandberg’s chief’s rival, Polycom, is a definite acquisition target with Avaya and HP being possible acquirers. Radvision is another company that could be an acquisition target for any vendor in the network, communications or collaboration space.
In summary, look for the activity that’s started in this space to continue as we move into 2010 as video becomes a bigger part of our every day work life.