Telepresence Sales: The Picture Gets Fuzzy
What’s troubling the telepresence market? The VAR Guy has been asking that question in recent weeks. First, Polycom (NASDSAQ: PLCM) warned of weak quarterly earnings in April. Then, Cisco Systems (NASDAQ: CSCO) CEO John Chambers last week essentially said the networking giant’s TelePresence sales aren’t meeting expectations. So what’s the problem: The economy and overall IT spending? Or is there a deeper challenge facing telepresence sales going forward? The VAR Guy weighs in.
First, let’s paint the picture. Cisco’s latest quarterly results met expectations but certain areas of Cisco’s business aren’t firing on all cylinders. A prime example: Telepresence. During an earnings call last week, Chambers said:
“Our Q3 performance in collaboration being flat is not where we expect it to be. And as you would expect, we are putting an aggressive action plan in place with specific focus on our sales execution. Part of this challenge is market-driven and part of it is our need to execute more effectively.
More specifically on collaboration. Increased sales of IP phones within our Unified Communication products were offset by sales decline in other products in the portfolio. Our TelePresence business, for example, has historically had tremendous success in the public sector and enterprise markets. As we saw continuous pressure in public sector and enterprise spending, we also saw the impact on our TelePresence results.”
TelePresence Sales: Reality Check Please
Hmmm… What’s the real challenge here? Perhaps it’s the consumerization of IT…
When Cisco first launched $300,000 TelePresence boardrooms several years ago, the lofty price tag didn’t seam so extravagant. Few people had plasma and LCD TVs in their homes. Video conferencing was not mainstream, and high-definition video conferencing was downright rare.
Fast forward to the present and our kids — rather than corporate CIOs — are leading the video generation. Flat-panel TV prices have fallen through the floor. Video cameras, WiFi and Internet access are built into most consumer technology devices. Oh, and free Skype video is now owned by Microsoft.
The VAR Guy’s conclusion: The real problem facing Cisco, Polycom and other TelePresence companies involves three words — “good-enough technology.” Indeed, inexpensive, consumer-oriented, good-enough video conference technologies have gone mainstream.
Can CIOs and CFOs continue to approve $300,000 telepresence projects? Perhaps yes for boardroom executives, who need high-quality, secure video settings for strategic discussions across the globe.
But most of the video conferencing market, The VAR Guy believes, is starting to vote for “good-enough technology” solutions.