The VAR Guy thought Cisco Systems was preparing to acquire LifeSize Communications, a tiny but fast-growing provider of video conferencing technology. But apparently the networking giant had much bigger things in mind — spending $3 billion to gobble up Tandberg. It’s an interesting move, especially when compared to Avaya’s bid to acquire Nortel’s enterprise networking business. Here’s some perspective.
Let’s start with Cisco’s ambitions. During Cisco Partner Summit in June 2009, The VAR Guy heard rumblings from multiple sources that Cisco planned to buy LifeSize Communications as part of a push into the low-end telepresence market. Apparently, The VAR Guy was only half-right (how’s that for spin…) Cisco wanted to grow its TelePresence business, but instead has acquired Tandberg for $3 billion to do so.
Here’s a video with Cisco Systems CEO John Chambers and Tandberg CEO Fredrik Halvorsen, explaining the deal. Sure, there’s a lot of feel-good chatter between Chambers and Halvorsen. But heck, The VAR Guy appreciates a window into the deal:
The VAR Guy’s Spin
The move comes at an interesting time for network integrators and solutions providers.
In addition to focusing on enterprise telepresence, Cisco plans to push into small business and even consumer settings. At the same time, rivals like Hewlett-Packard have been introducing low-cost, PC-centric video conferencing offerings. (Example: Check out HP SkyRoom.) Meanwhile, the traditional networking market is consolidating as Avaya tries to finalize its buyout of Nortel’s enterprise business.
There’s logic behind the consolidation. Back on Sept. 9, The VAR Guy told readers there was no way Cisco would bid on Nortel’s enterprise assets. The reason: Cisco focuses on growth-oriented acquisitions, rather than mature industry consolidation deals. Avaya, in stark contrast, bid for Nortel’s enterprise business to buy some market share and account control.
Cisco-Tandberg
The Cisco-Tandberg deal has already promoted speculation that Polycom will seek or attract a buyer. But The VAR Guy wonders: Would it be wiser for someone to place a bid for fast-growing, privately held Lifesize? Hmmm…
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VAR Guy I agree with you about Lifesize. They are the hidden gem of this market. Great, low-cost technology that’s winning business within the SMBs we serve. Why are you so interested in them? Are you an investor? Do you use Lifesize?
$3 Billion for Tandberg is madness. Agree totally that a smaller more innovative acquisition such as Lifetime would have made much more sense…..
CraigS@1: The VAR Guy has no financial interest in Lifesize. He saw the company’s products in action during several recent customer meetings and was impressed.
Nick@2: The VAR Guy isn’t dismissing Cisco-Tandberg. John Chambers has a heck of a track record with successful acquisitions. So, our resident blogger will give Mr. Chambers the benefit of the doubt (how noble, eh?).
But Lifesize is a pretty interesting play…
Interesting theory on LifeSize.
You’re right about Cisco. Their move seems overblown.
Especially since LifeSize now has a new Skype compatible video product that may finally bring videoconferencing into a mainstream.
It’s cheap enough I may buy one.
Now I wonder if Cisco is looking at LifeSize and wishing they saved the money by buying them.
Mark135: The VAR Guy wasn’t suggesting the Tandberg move was a bad one. But our resident blogger is keeping an eye on LifeSize.