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 Channel Futures

Best Practices


Video Conferencing: TelePresence Boom or Bust?

  • Written by The VAR Guy 1
  • December 15, 2008

Cisco Systems TelePresence at The VAR Guy
Once again, the IT pundits were wrong. Lots of “experts” said the video conferencing and TelePresence industries would enjoy a boom during the economic bust. The reasoning: Executives are cutting business travel to save money, and opting instead for video conferencing and TelePresence. But here’s the problem: Not all video conferencing companies are built equally. Consider the situation of Polycom (a big, established player) vs. LifeSize Communications (a nimble start-up).

On December 12, the Barron’s Tech Trader Daily blog noted:

Polycom (PLCM) shares are trading sharply lower on signs that business is slowing for the video and audio conferencing equipment company.

This morning, Stifel Nicolaus analyst Sanjiv Wadhwani noted that checks find Polycom is aggressively discounting its entry-level video conferencing system to better compete with privately held LifeSize. He also writes that large deals in video conferencing are taking longer to close, with customers requiring multiple levels of approval. “Checks with resellers show that the month of November was quite slow, with sales down from October. He says the voice side has been “equally negative if not worse.”

The key takeaway: Hundreds of articles written in September and October alleged that the video conferencing and TelePresence industries were immune to the recession. In stark contrast, The VAR Guy has warned readers  — over and over again — that NO industry is immune to a recession. He told readers that TelePresence (i.e., next generation video conferencing) still faced challenges.

Competition Thrives

Sure, certain companies within hot industries will continue to do well. But Polycom competes against an entrenched VoIP giant (Cisco Systems, which has TelePresence momentum) and small, nimble firms (LifeSize Communications… which The VAR Guy spotted last February). So even in strong IT markets, fierce competition looms around every corner.

If videoconferencing and TelePresence are going to save everyone, how come Wall Street appears bearish on Polycom?

Fact is, Polycom has some compelling video conferencing and TelePresence solutions. But the rising video conferencing tide won’t lift all boats. Polycom and many other video conferencing companies will still need to build channel programs and drive demand for their solutions…

The VAR Guy is updated multiple times daily. Don’t miss a single post. Subscribe to his newsletter, RSS and Twitter feed.

Tags: Cloud Service Providers Digital Service Providers MSPs VARs/SIs Best Practices

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6 comments

  1. Avatar Nick December 15, 2008 @ 9:45 pm
    Reply

    Only one industry is immune to the recession, and it involves Hops and Barley

  2. Avatar Nonbeliever December 16, 2008 @ 1:47 pm
    Reply

    Interesting to see you think the videoconferencing industry is a bust but for some reason you have faith in LifeSize. Have you noticed how their market share hasn’t really done anything earth shattering in the last 3 years since they came to market? Polycom, being cash rich, is going to weather this storm, I can’t say the same about VC based LifeSize. Time will tell.

  3. Avatar The VAR Guy December 16, 2008 @ 2:02 pm
    Reply

    nonbeliever: The VAR Guy never said video conferencing was a bust. But he did say the rising video conferencing tide won’t lift all boats. Nice for PolYcom to have cash. And yes: VC backed companies face lots of questions right now. But LifeSize seems to be popping up on the buzz meter more and more. Pure hype? Could be. But there’s little buzz around Polycom at the moment…

  4. Avatar Mark December 16, 2008 @ 11:58 pm
    Reply

    I think that a lot of companies using video conferencing it will be a year of conserving cash by purchasing blocks of time.

    How do companies know Jan 1, 2009, what there demand will be in June 2009.

  5. Avatar The VAR Guy December 17, 2008 @ 1:02 am
    Reply

    Mark: Your point is right on the mark. Purchasing blocks of video conferencing time from hotels, conference centers and even vendors will be the norm in 2009. Great point.

  6. Avatar bruce December 17, 2008 @ 10:59 am
    Reply

    Video Conferencing has always been in the “this is gonna be the year of …” mode and telepresence is where all the big iron players have introduced systems to target this sector. It’s no surprise then that adding a couple of dozen sales at $500K+ is going to show real revenue increases. However is it any wonder that as soon as “le crunch” appears at the breakfast table the rapid delay in the capex sign-off will have such an adverse affect? This doesn’t seem to mean that video conferencing is now off-limits and travel budgets have been increased but a lot of companies are opting for hosted solutions such as WebEx and Nefsis, etc and at such dramtic price savings is it any wonder?

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