Category Archives: Tandberg

Apple Isn’t in the Cisco Cius Picture

I don’t want to spend a lot of time on it, but I’ll offer a relatively brief assessment of Cisco’s Cius enterprise-tablet announcement yesterday.

Look, folks, the Cius is not competing with the iPad for the affections and disposable income of tablet-buying consumers. That’s not Cisco’s game, is not part of Cisco’s plans, and is just not happening. So, as difficult as it might be to do, forget about Apple and the iPad for now. Put it out of your minds. Apple gets more than its share of attention already, and I’m sure we’ll have many other reasons to pay homage to the iPad, the iPhone, and the other iWonders best0wed upon us by the wizards of Cupertino.

Now that we’ve determined what the Cius (as in “see us,” get it?) is not, what exactly is it? For starters, it’s clearly an extension of Cisco’s enterprise videoconferencing and video-collaboration portfolio. Cisco has been working from the high end to the low end, starting with luxury, room-based telepresence, buying its way into a wider range of corporate telepresence and videoconferencing through its Tandberg acquisition, and now developing its own low-end tablet, the Cius, to make enterprise video mobile and to deliver it to desktop docking stations.

So, one way of understanding the Cius is as a means for Cisco to  extend telepresence, videoconferencing, and video collaboration to areas of the enterprise it has yet to penetrate. It’s Cisco’s way of making sure video proliferates throughout its customer base, giving Cisco opportunities to derive sales not only from video-based products, but also from the enterprise-network upgrades that inevitably result from widespread utilization of high-bandwidth video on a corporate campus. For Cisco, there’s a revenue multiplier effect that is concomitant with the spread of enterprise video.

Not coincidentally, this move also precludes potential competitive encroachments by competing vendors of low-end videoconferencing and video-collaboration products. Cisco had a hole at the low end of its video product portfolio, and it has closed it with this announcement.

With the Cius, Cisco also integrates its enterprise-wide video-collaboration tributaries with its preexisting IP phone, unified communications (UC), and data-collaboration (as in WebEx) product streams. The docking station that comes with the Cius isn’t just an ornamental device holder; it is intended to act as the physical point of integration between personal video-collaboration and Cisco IP phones.  Competitors cut off at the pass here include Microsoft, HP, Avaya, and scores of others.

Finally — and Cisco’s reach might exceed its grasp on this one — the networking giant would like enterprises to view the Cius as an office-computer replacement. In defense of that argument, Cisco cites the Cius’ notebook-caliber Atom chip, its capacity to accommodate a monitor and keyboard, and its support for virtualization. I think Cisco has to put more meat on these skeletal bones, but I can see where they’d like to go and why. Again, Microsoft is a big target. It will be interesting to see how closely Cisco and Google, whose Android OS runs the Cius, can work together to disrupt their common foe.

All in all, the Cius was a logical move for Cisco, a practical and broad-based extension of its video-collaboration strategy. Apple, though, isn’t in this particular picture.

Magor Offers “Telecollaboration” to SMEs

Some have accused telepresence of being the preserve of the rich.

To be sure, room-based telepresence has an exclusive aura, conferred by its prohibitive price and imperious requirement. It is a proficient, if costly, means of bringing meeting participants together around a virtual boardroom table, but it is relatively inflexible and stiffly formal when asked to share the stage with data-based collaboration.

For verisimilitude, though, telepresence sits at the pinnacle of the video-meeting throne. It is followed in the hierarchy by videoconferencing, which covers a broad swatch of ground and extends from specialized systems to software-based services that provide a best-effort experience on nearly any device with a broadband Internet connection. With regard to the latter, think Skype.

It has become readily apparent, in fact, that the market for video communications is richly segmented rather than monolithic. Cisco would like to get more than its “fair share” of the market action, but its current portfolio (even with Tandberg) remains vulnerable to competitive incursions in the SME space, where price sensitivity is more acute than in the rarefied environs of the world’s largest transnational corporations. To be fair, though, even the world’s corporate kingpins are holding their wallets a little tighter as we move into a “new normal” of permanent cost controls and reduced growth scenarios.

Macroeconomic misgivings aside, there is also that unsettled question about how elegantly collaboration can be brought, figuratively and literally, into the videoconferencing picture.

One company taking its best shot at addressing the challenge is Magor Communications Corporation. The company calls what it does “telecollaboration,” which it defines as an “emerging category of communications solutions (that) . . . . combines high-definition (HD) videoconferencing and advanced collaboration capabilities to enable life-like interactions and experiences no matter where people are located.”

Put simply, Magor is trying to fuse adaptable high-quality (1080p, where possible) videoconferencing with data-based collaboration.

The company, which is now raising a round of financing, recently gave me an opportunity to experience its technology firsthand.  I came away impressed by the price-performance proposition, the quality and naturalness of the videoconferencing experience, and the smooth interplay of collaboration and videoconferencing. The user interface also seemed uncluttered and surprisingly simple. Like the best telepresence and videoconferencing systems, Magor’s facilitated a natural eye-to-eye conversation without getting in the way.

The Magor technology doesn’t give you all the visual brilliance of, let’s say, Cisco’s telepresence, but it also won’t give mid-sized enterprises sticker shock. That factor, and some others I’ll mention at the end of this piece, could be pivotal to the company’s success.

If you ask Magor what sets it apart from the pack, it cites four main differentiators.

At the top of its list is a patented video-compression technology that allows Magor to stream HD video at 2 Mbps, peaking at 4 Mbps. In contrast, it says, its competitors transmit at 5 Mbps, peaking at 30 Mbps, to accommodate one 1080p stream. When the network is heavily congested, Magor says, its system can dynamically and gracefully adjust the video quality to accommodate constrained resources. If network conditions improve, Magor readjusts video quality accordingly. To effect these quality adjustments, Magor’s software samples the video stream multiple times per second.

A second point of differentiation, according to Magor, is that its functionality is delivered entirely in software that runs on industry-standard, off-the-shelf hardware. Magor says it is looking to port its software to a range of platforms, including increasingly powerful notebook PCs, tablets (such as the iPad), and smartphones.

Magor says another distinguishing characteristic is its support for original-format data collaboration rather than for a bandwidth-sapping H.323 “collaboration image” pushed through a side channel.

Finally, Magor points to how easy its systems are to use. To add users or data collaboration to a conference, participants need only push a button on a SIP phone or click on a mouse.

With regard to pricing, a single-display system goes for approximately $15,000, with a dual-display system selling for about $30,000, and a three-display configuration going for $45,000. The two- and three-display configurations are offered with the option to purchase additional HDTV cameras, which increases the price of the packages by about $2,000.

Launched in 2006 under the aegis of Wesley Clover — an investment firm chaired by Terry Matthews, founder of Mitel and Newbridge Networks — Magor sports an accomplished executive team. Mike Pascoe, the company’s CEO, served in the same role at Meriton Networks and PairGain Technologies. Dan Rusheleau, Magor’s executive VP of product development, co-founded Newbridge. Not surprisingly, considering its progenitor, the entire executive team comprises alumni of Terry Matthews’ corporate constellation.

I suspect there’s a potentially sizable market for what Magor is selling, but it will face competition from above — Cisco, HP, Polycom — and from below, where Logitech’s LifeSize and the cheap-and-cheerful Skype are among the players.

The big challenge for Magor will be to establish strong business partnerships that give it the industry profile, channel reach, and business scalability to gain separation from the pack. It is busily building OEM strategies, vertical-market plans, and reseller networks. It already has Mitel in its camp, and it is working on a series of other agreements.

Cisco’s Tandberg Acquisition Officially Approved, Dance for Polcyom Begins

When I first learned of the alleged acquisitive interest Apax Partners was said to have expressed toward Polycom, I dismissed it as nothing more than a media head fake.

Let’s consider: When news of that sort is leaked, it’s made public for a reason. In this context, it seemed, the reason was to bring others to the table. Somebody who has an interest in Polycom being acquired wanted to engender a bidding war for the company. It happens all the time.

There was something else, too. Apax didn’t seem a likely acquirer. Where were the direct synergies with Polycom in Apax’s investment portfolio? Where were the connections between Apax’s people and major vendors in the videoconferencing and unified-communications worlds? The deal didn’t offer enough risk mitigation for Apax; the pieces didn’t fit together.

Even if Apax had wanted to acquire Polycom, I’m not sure it had the conviction or the stomach to conclude the deal at the price Polycom would have commanded.

Now, though, Cisco’s acquisition of Tandberg has been consummated, and Polycom stands exposed. Polycom was Tandberg’s videoconfencing rival, and it’s a company of considerable importance to the UC strategies of more than one vendor.

We must consider the Cisco-Tandberg context, because contrivances like the leaked report of Apax’s interest in Polycom tend not to occur in a vacuum. Who’s supposed to step from the shadows and make a welcome bid, at an appetizing price, for Polycom?

There are a few candidates, including one that already has tipped its hand. That player is The Gores Group, 51-percent owner of Siemens Enterprise Communications. But The Gores Group’s bid was leaked, too, and we have to wonder why. Expect others to enter the picture, publicly or otherwise.

An obvious candidate is Avaya. Even though Avaya has barely digested its acquisition of Nortel’s enterprise business, it might feel as though it cannot let Polycom fall into other hands. In a perfect world, Avaya would not have to pursue Polycom now, immediately after assimilating and integrating Nortel.

Nonetheless, strategic imperatives might necessitate a move. Avaya is backed by the high rollers at Silver Lake, who rarely think small. They might not be willing to pass up the opportunity of taking Polycom off the board.

Who else? Not Dell. I can’t see it happening.

I don’t think HP will make the move, either. It’s got is own telepresence systems already, it’s very close to Microsoft in unified communications, and it wants to leverage Microsoft in the battle against their common enemy, Cisco.

Juniper is a possibility, but the company has signaled that it will grow organically, not through big-ticket M&A. Juniper will stay focused on building its intelligent network infrastructure and try not to get distracted by the action in the M&A casino.

IBM could make a move for Polycom, but I don’t think it will. Microsoft also enters the equation.

Yes, Polycom sells hardware, and Microsoft has steered clear of stepping on the toes of hardware partners such as HP. But there’s a way Microsoft could structure a deal that would be amenable to HP and its other hardware partners. All it takes a little creativity and ingenuity, and Microsoft retains plenty of that commodity on the enterprise side of its business.

If I were making book on which company will acquire Polycom, I’d make Silver Lake-baked Avaya the favorite, with Gores-backed Siemens Enterprise Communications the second choice, Microsoft the third option, with IBM next. Of course, in no way do I encourage illicit gambling on prospective M&A activity.

If you have theory on whether Polcyom will be acquired, and by whom, feel fee to share your thoughts below.

EU Makes Cisco Wait for Tandberg

Despite protestations to the contrary, Cisco is not having an easy time closing its $3.34 billion Tandberg deal.

First, Cisco had to endure a protracted period of haggling and negotiation with recalcitrant Tandberg shareholders. Eventually, after the gamesmanship and ultimatums receded, Cisco sweetened tis offer and persuaded the Tandberg resistance movement to acquiesce.

Everybody thought it was a done deal. Now, though, regulators at the European Union have extended their review of Cisco’s pending Tandberg acquisition so that they can more closely examine redress of competitive concerns.

Even though Betfair doesn’t yet run a market on whether Cisco’s deal for Tandberg or HP’s pending bid for 3Com will go through, I’d have to think the odds remain heavily in favor of Cisco getting a somber nod of approval from the EU regulators when the review expires on March 29.

Still, Cisco could hardly have known that its pursuit of Tandberg, a videoconferencing vendor of considerable strategic value to the networking titan, would become a Nordic melodrama.

Meanwhile, potential acquirers of Polycom might wait until the end of this month before deciding whether the time is right to close their deal.

Unfriendly Skies Boost Cisco Videoconferencing

Even before the latest mental defective attempted to use explosive underwear to blow up a Detroit-bound flight from Amsterdam, commercial air travel has been thoroughly unpleasant. As when we go to the dentist, we actually pay airlines to inflict pain and inconvenience on us. What a business model!

In a bygone era, when Frank Sinatra sang “Come Fly with Me,” air travel was seen as exotic and sophisticated. Now it’s an airborne bus ride, replete with endless travel delays, intrusive and humiliating security checks, and customer service that verges on the aggressively antagonistic.

Yes, the security procedures might be necessary in an era of unhinged madness, but that doesn’t make them any more palatable. (Moreover, even with the advent and widespread deployment of full-body scanners, “ass bombers” — I’m not making this stuff up, unfortunately — could still wreak havoc.)

Commercial air travel is a form of self-abasement. Even without the heightened security measures – in which we all get an inkling of what it’s like to be interrogated and processed as criminals – the penny-pinching accountants at the major airlines have been doing their worst to make commercial flights ordeals worthy of the Inquisition.

This is where I get to Cisco. No, Cisco is not a commercial airline, but it stands to benefit from increasing customer dissatisfaction with the airline industry.

As its tortuous $3.4-billion acquisition of Tandberg demonstrates, Cisco is banking heavily on video-based collaboration, such as high-end telepresence and videoconferencing. This is one of Cisco’s “market adjacencies.” in that video consumes larger amounts of bandwidth than does data or voice communication, and the adoption of video-based communication will drive network upgrades of routers and switches at carriers and enterprises alike.

For that reason, the intensive push into video represents smart strategy for Cisco. To be hugely successful, however, one needs a certain amount of good fortune as well as tremendous proficiency. In that respect, the increasingly disagreeable nature of commercial air travel should play into Cisco’s hands. Air travel has been costly for enterprises for a long time, and now it’s become an exercise in self-loathing for anybody who must go on a business trip. At some point, sooner rather than later, a growing number of enterprises will consider investments in videoconferencing as alternatives to a wide range of travel on commercial airlines.

There will, of course, be instances where seeing the customer or partner in person is necessary. On those occasions, airlines will continue to be patronized by reluctant business travelers. Even then, however, gilt-edged CEOs and their rarefied ilk will consider private jets over commercial airlines. They’ll justify the investment somehow.

What’s more, the bar will be raised on what’s considered essential business travel. More meetings will be done by videoconferencing. The quality of the product, and of the experience, has improved significantly. Now, instead of feeling like you’re participating in a jerky, jitter-delayed Russian satellite broadcast from the 1970s, you actually feel like you’re taking part in a natural discussion. Videoconferencing solutions will only get better, while it’s hard to make the same claim for commercial air travel.

Consumers, too, will become more averse to the airport experience. They’ll give more consideration to driving, to buses, and to trains. As desktop videoconferencing improves, they’ll give more consideration to that option, too.

Maybe it’s time, again, to short the airlines.

Cisco’s Chambers Says Tandberg Acquisition Went According to Plan

Come on, John. Just admit you were temporarily flummoxed. We all make mistakes, take a wrong step from time to time, and you and your boys got knocked back on your heels before regaining your balance on this one.

That was my reaction when I read a few days back that Cisco CEO John Chambers tried to persuade visiting financial analysts that his company’s turbulent $3.4-billion acquisition of videoconferencing-vendor Tandberg went pretty much according to plan.

Really, John? What sort of plan was that? Is that the one that includes needless digressions, unnecessary distractions, high-stakes gamesmanship, and take-it-or-leave-it ultimatums?

If so, then you must have too much time on your hands. Hey, I understand the desire to inject a little excitement into the acquisition process, but the Tandberg takeover was like the trajectory of a runaway roller-coaster. It was, well, a little out of control.

Yet we’re supposed to believe that Cisco foresaw every stage of the process and that the deal went down just like it was drawn up?

I have no idea whether Chambers made these claims with a straight face or with tongue firmly planted in cheek. Nor do I know whether the analysts reacted by rolling their eyes or putting down their notepads, refusing to play along with the charade. Perhaps, as guests, they felt that wasn’t an appropriate response.

Said Chambers of the takeover drama and of Tandberg itself:

“We went into it knowing the exact challenges that we would face. … It unfolded much like we anticipated. . . .

“Their leadership team may be the best total leadership team we’ve had since the acquisition of Crescendo in 1993.”

Crescendo, as industry historians will recall, brought Cisco a wealth of engineering and executive talent, including Mario Mazzola, Luca Cafiero, and Jayshree Ullal.

That just makes me wonder even more about how the tortuous Tandberg deal went down. If Tandberg has such great executive talent, and it was so strategically valuable to Cisco as a linchpin of its video strategy, then why not get the deal done faster, without the diversions and the shuck-and-jive tactics? Time is money, as the lawyers involved in this deal with attest.

As I said at the top of this piece: Come on, John.

Was Tandberg Worth Cisco’s Trouble?

Over at Motley Foot, Anders Bylund is wondering whether Tandberg was worth all the trouble Cisco had to endure to get it.

But is Bylund asking the right question?

The strategy behind the Tandberg acquisition wasn’t the problem. Cisco had good reasons for wanting to acquire the company. Really, Cisco’s difficulties in this matter sprung from its own tactical negligence, not from any deficiency or flaws inherent to Tandberg as a an object of corporate affections.

It was all down to preparation and execution. Too little of the former led to weakness in the latter.

Cisco Says It Now Controls More Than 90 Percent of Tandberg Shares

The offer deadline might have passed, but CIsco apparently persists in its efforts to buy shares of Tandberg, the videoconferencing-systems leader it has sought to acquire for about $3.4 billion.

In fact, Cisco now says in a press release that it has “received acceptances for or purchased shares representing more than 90% of the shares in Tandberg.”

Here’s more from the press release:

As a result of additional acceptances registered today, Cisco hereby announces that approximately 99.8 million shares have been tendered, representing 89.1% of the outstanding shares in TANDBERG. In addition, Cisco has on November 18 and 20, 2009, purchased a total of 2,238,600 shares in TANDBERG, corresponding to 2.0% of the outstanding and issued shares. The shares tendered, combined with shares owned, currently represent approximately 102 million shares, or approximately 91.1% of the shares and voting rights in TANDBERG.

Cisco now will move to acquire the remaining Tandberg shares and to eventually delist Tandberg from the Oslo Stock Exchange.

Cisco Gets 89 Percent of Tandberg Shares, Waives 90-Percent Condition

Those of you of a certain age will remember the immortal words of Maxwell Smart, played by Don Adams, in the sitcom television series “Get Smart.” When Smart or one of the other characters came tantalizingly close to a target or a goal, he would say: “Missed it by that much.”

Cisco’s CEO John Chambers and his lieutenants must have been doing their best impressions of Maxwell Smart today as they watched their percentage of tendered Tandberg shares inch toward the 90-percent threshold that had been set as a condition for Cisco’s $3.4-billion acquisition of the Norway-based videoconferencing-systems vendor.

As of the deadline today, Cisco had 89 percent of Tandberg shares in its pocket, not quite enough to close the deal. Still, Cisco got close enough to justify a waiver of the 90-percent condition. From a Cisco press release posted to the website:

In the voluntary public cash offer to acquire all outstanding shares in TANDBERG, Cisco (NASDAQ: CSCO) announces that following the expiration of the offer period at 5:30 pm CET on December 3, 2009, Cisco controls approximately 89 percent of the outstanding shares in TANDBERG (OSLO: TAA).

The received acceptances represent a lower acceptance ratio than the 90 percent condition to the offer set out in Section 1.7 in the offer document dated October 7, 2009. However, Cisco has decided to waive this 90 percent condition.

There may be adjustments to the preliminary result due to possible corrections and changes following registration with the Verdipapirsentralen (VPS). The final result will be published as soon as it is available.

Cisco intends to complete the voluntary public cash offer subject to the satisfaction or waiver of the remaining conditions to the offer as set forth in the offer document, Section 1.7, as soon as possible. Assuming completion of the offer, Cisco will in relation to the remaining shares in TANDBERG proceed as required under chapter 6 of the Norwegian Securities Trading Act.

The process of acquiring Tandberg has not gone well for Cisco. On the whole, Cisco must be embarrassed by the episode. It wasn’t an unmitigated disaster, though, and Cisco now has a chance to move ahead with its Tandberg integration and with its plans for dominance of video-based collaboration and communication.

Cisco has traveled a bumpy, potholed road on its quest to close the Tandberg acquisition. The tactical missteps in the botched execution of the deal have obscured the reality that Cisco’s strategic reasons for pursuing Tandberg were exceptionally sound.

Cisco now has an opportunity to put this saga behind it. Lessons presumably have been learned.

Clock Runs Out Today on Cisco’s Tandberg Offer

Later today, we’ll know whether Tandberg shareholders were willing to tender 90 percent of the company’s stock to Cisco, pursuant to the terms and conditions of the networking giant’s $3.4-billion acquisition bid for the Norway-based videoconferencing-systems vendor.

The deadline for the offer, which sees Cisco paying 170 Norwegian crowns for each share, is 5:30pm Central European Time, which translates as 11:30am Eastern and 8:30am Pacific.

If Cisco doesn’t quite reach the 90-percent threshold, what it does next will be closely watched. It could walk away from the deal, but most observers think the company will waive the 90-percent requirement and attempt to negotiate, presumably from a position of strength, with the diminished numbers of naysaying shareholders.

The actual percentage of shares tendered is likely to be very close to the required target. Without a doubt, much arm twisting, cajoling, campaigning, persuading, and remonstrating have been occurring behind the scenes.

Cisco Could Waive Conditions in Protracted Bid to Acquire Tandberg

As Tandberg shareholders glacially and incrementally tender their shares at Cisco’s proposed takeover price of 170 Norwegian crowns per share, the possibility grows that Cisco could waive the requirement that it reach the 90-percent share threshold specified in the terms and conditions relating to the acquisition.

As it now stands, Cisco has received about 84 precent of Tandberg’s shares.

On Tuesday, Cisco extended its offer to December 3, and it said today that the bid would not be extended beyond that deadline. Cisco will announce Thursday whether the condition of 90-percent shareholder approval has been satisfied. If that condition goes unmet, Cisco will decide whether to waive it or to withdraw its offer for Tandberg.

The latter seems an unlikely option. Cisco has gone too far, and gone through too much trouble, to reverse course now.

Nonetheless, it’s a close call as to whether it will attain the share-tender approval of 90 percent. The closer it gets to that mark, even if it doesn’t quite hit it, the easier it will be for Cisco to waive the condition with something approaching impunity.

Getting as close to that mark as possible also would give Cisco negotiating leverage with dissident shareholders. That might become an important factor, because waiving the 90-percent requirement would entail negotiation with any holdout faction of shareholders, thus prolonging the acquisition process. If Cisco must go down that road, it will want it to be a short, paved, smooth avenue leading, at long last, to something resembling Easy Street.

So far, nothing about Cisco’s acquisition’s bid for Tandberg has been easy or smooth. Cisco misread this situation badly, and has struggled mightily to counter the objections and reservations of dissident shareholders who had a clearer understanding than Cisco of the terms and conditions surrounding a Tandberg acquisition.

Cisco has done a lot of acquisitions in its history, but most of those occurred in salubrious economic circumstances, with different M&A personnel at the helm. Also worth noting is that Cisco, even in its glory days, typically refrained from acquisitions of this size.

Moreover, the company never has done a multibillion-dollar acquisition in Europe. At the current valuation of its raised offer, Cisco will pay about $3.4 billion in its foreign cash reserves for Tandberg.

Although I’m sure Cisco has grand aspirations for Tandberg as a property that will help it develop and grow the market for pervasive videoconferencing, Cisco’s current team of M&A wheeler-dealers is unlikely to have fond memories of Norway.

Cisco Extends Offer Period for Tandberg Shares

Reuters and others are reporting that Cisco today extended its offer period for shares of Tandberg, the Norwegian video-conferencing company, by two days, to December 3.

Cisco’s terms and conditions relating to the bid will remain unchanged, which means at least 90 percent of Tandberg’s shares must be tendered at the offer price of 170 Norwegian crowns per share.

In a statement, Cisco said the following:

“Soon after expiration of the extended offer period, Cisco will announce whether the 90 percent condition for the offer has been met.”

The consensus view is that Cisco is very close to having the required support from Tandberg shareholders, but that it needed a bit more time to solicit the share tenders that will put it over the top.