With Cisco gobbling up Tandberg for $3 billion and bolstering its video conferencing lineup all eyes turn to Polycom, another market leader that looks ripe to be acquired. If not, Polycom is expected to be able to hold its own against Cisco.
Cisco's acquisition of Tandberg gives the company a bigger installed base for its telepresence products and an arsenal of lower-end video conferencing gear. Polycom will either need to compete head-on, or be acquired. Analysts seem to be betting that Polycom will be acquired. If not, analysts say Polycom (all resources at ZDNet, TechRepublic) can gain video conferencing share in the short run as Cisco completes the Tandberg purchase.
Cowen analyst John Marchetti notes that Polycom can find plenty of partners given that Tandberg is now owned by Cisco. Marchetti adds that Polycom can compete with Cisco, which is likely to take a hands off approach with Tandberg, but it's hard to rule out a takeover in the future. Marchetti says:
We believe that Polycom still has significant room for growth given our positive view on the video conferencing market and its strong product offerings in enterprise video collaboration. Further, from a partnership perspective, Polycom likely benefits as other equipment vendors look for an opportunity to work more closely with Polycom. Lastly, while acquisition possibilities likely look to increase for Polycom over the near term, we think, given its voice business, that Polycom is a little more complicated and expect that if a deal does occur, it will take some time to happen and do expect an announcement is imminent.
That voice business that Marchetti refers to is the other side of Polycom. The company is a specialist in video conferencing but also provides voice conferencing and devices for calls. That voice business could complicate a takeover.
Simply put, an acquisition of Polycom may take some time. Piper Jaffray analyst Troy Jenson says that Polycom can do fine on its own. Jenson said Cisco's Tandberg takeover could benefit Polycom and other competitors like LifeSize.
Here are Jenson's reasons to believe that Polycom can compete with Cisco/Tandberg:
- The overall industry is going;
- Polycom is the only big video player remaining;
- Tandberg customers may pause ahead of the Cisco integration;
- Polycom can land new channel partners that may not want to sell Cisco gear;
- And Polycom can cherry pick Tandberg sales talent.
In the long run, however, Polycom is likely to be an enticing target for a larger fish looking for a video conferencing play.