With Cisco announcing its acquisition of Tandberg earlier today, many analysts shifted their attention to Polycom. That’s because Polycom is the number-two player, behind Tandberg, in the videoconferencing-systems market. One could make a logical inference that, with Cisco taking possession of Tandberg, Polycom becomes a takeover target for anybody intent on entering the space.
In the long run, Polycom probably won’t remain independent. Nonetheless, I don’t envision anybody making an immediate play for it.
That’s partly because, as Larry Dignan notes at ZDNet, Polycom is not a pure-play videoconferencing company. As anybody who’s done time in boardrooms during the last few decades will attest, Polycom is a longstanding vendor of audio teleconferencing systems. The value inherent in that part of Polycom’s business might not be fully appreciated by a vendor desirous of Polycom’s videoconferencing systems. An IBM or HP, to use hypothetical examples, might want only the video side of Polycom’s business, undervaluing or declining to buy the audioconferencing side of the house.
The fact that Polycom has a business that is more diversified than Tandberg’s makes it more complicated as an acquisition target.
A second consideration is whether Polycom really is in demand simply because Tandberg has been taken off the table. I’m not sure the logic follows, if only because not all the companies sizable enough to acquire Polycom will be inclined to follow Cisco’s lead.
HP, for example, is focused on data-center convergence; Dell is locked down on trying to integrate and assimilate its acquisition of Perot Systems; Siemens is in the midst of a painful restructuring and seems disillusioned with its forays into information technology; IBM, like HP, is focused on data-center convergence; Avaya is trying to complete its acquisition of Nortel’s enterprise business assets.
I just can’t image Sony, which is trying to get is consumer-electronics house in order, taking a detour into enterprise conferencing; nor do I see Juniper making a big bet on videoconferencing when it’s trying to take market share from a potentially distracted Cisco in meat-and-potatoes enterprise.
Is there anybody else? Does Microsoft want to enter an enterprise hardware business? Probably not, though it’s clear that Cisco and Microsoft are increasingly competing for business in enterprise communications and collaboration.
There’s no rush for Polycom. It doesn’t need to find a white knight. As a strong, independent player in videoconferencing systems, Polycom isn’t about to fall off the face of the earth because Cisco bought Tandberg.
If anything, Polycom will find it has more friends, in the form of resellers and technology partners, than it had last week. As Cisco’s acquisition of Tandberg goes through the approvals process, Polycom will have an opportunity to capitalize on the transition. It should be able to maintain its own market share, and it will have a chance to steal share from Tandberg.
For the time being, Polycom isn’t going anywhere. It won’t have to go begging for a bigger play to take it out. A buyer might step forward at some stage, but don’t look for anything to happen immediately.