December 15, 2008
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.
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…
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