With Cisco making $ 3 billion offer to acquire video conferencing solution provider Tandberg, the focus is now on Polycom as whether the company will be able to sustain itself as a pure-play video conferencing player or be gobbled by another giant just as Cisco did with Tandberg.

Cisco’s acquisition of Tandberg is certainly set to dramatically change the whole video conferencing market.

The acquisition of Tandberg allows Cisco to further enhance its enterprise product offerings having acquired desktop conferencing solution provider firm, Webex in 2007. The product line of Tandberg is much more advanced and enables multi-site video conferencing apart from the conventional board video conferencing solutions.

With more and more enterprises opting to use IP as backbone for video conferencing services, the scenario ideally fits Cisco which is considered to be world leader in networking solutions. Cisco can now make a pitch to offer end-to-end video conferencing solutions with networking aspects included in the offerings. In fact it was this belief which prompted Cisco to enter the enterprise tele-presence space. In India as well as across the globe Cisco has partnered with Tata Communications to offer tele-presence solutions and services.

In India Polycom has enjoyed market leadership position for many years mainly due to its competitively priced products. Tandberg products are positioned as premium video conferencing solutions.

Polycom has entered into exclusive partnership arrangements with telecom service providers such as Airtel and Reliance Communications. This has enabled Polycom to maintain competitive advantage in terms of reach. But this arrangement found more relevance in a scenario where enterprises planned to make their video conferencing communications over TDM infrastructure. The trend is rapidly changing with more and more enterprises opting to choose for IP based VC communication as mentioned earlier.

Additionally while Tandberg’s product bouquet consisted more of VC (video conferencing) solutions, Polycom’s offerings include not only VC solutions but also voice conferencing solutions. The demand for such solutions is gradually dwindling. Hence Polycom may not command a similar price premium as that enjoyed by Tandberg. 

Another company to be impacted significantly is Radvision. Radvision’s one third business comes from Cisco as part of an integrated offering agreement. But with Cisco acquiring Tandberg, there is no doubt that Cisco will aim to push for integrating Tandberg products with its offerings rather than that from Radvision.