Cisco extends grip on videoconferencing with Tandberg acquisition

Cisco plans to dominate collaboration

The announcement that Cisco is to acquire videoconferencing specialist Tandberg, for just under $3bn (£1.9bn), marks a significant development in the battle for domination of the global online collaboration market, which analysts say is worth £21bn a year.

That competition was further ratcheted up this week by Google, which has started sending out invitations for its cloud-based collaboration platform, Wave.

The acquisition is the biggest Cisco has made since it hoovered up Webex - another online collaboration vendor - in 2007. Marthin De Beer, Cisco's senior vice president of emerging technologies, believes that the next phase of productivity and growth will be centred on video and collaboration.

"Collaboration is a $34bn [£21bn] market today, enabled by technologies that have video at its heart. We believe that an end-to-end video architecture is the next-generation play," said De Beer.

It's a view that has credence among industry sooth-sayers, such as Qoucirca's Rob Bamforth, principal analyst for communication, collaboration and convergence.

"Applications like videoconferencing may struggle to stand apart when really it's just another form of communications that is visual. That was a Tandberg philosophy and it looks like it's been proved right," said Bamforth.

Cisco will integrate Tandberg's end-point hardware and its network infrastructure solutions directly into its Telepresence offering, extending its reach from the desktop to the boardroom.

"Tandberg will fill in the middle part of Cisco's offering – the gap between its high-end Telepresence solutions and the low-end web cams and video phones," said Gartner research vice president Jeff Mann.

One of the criticisms continually levelled at Cisco is that its systems are proprietary, locking in customers to its architecture. De Beer counters by saying that apart from offering customers an integrated end-to-end system, Cisco would support Tandberg's current hardware, which allows interoperability with other vendors' systems.

Mann said the acquisition will deepen Cisco's commitment to the video market, which it recognises as being an important element of collaboration. However, warned Mann, "Cisco still needs to do other acquisitions or develop products to fill out its collaboration portfolio in the area of wikis, document management and team workspaces."

Cisco's competitors include HP, with its Halo Telepresence system, Polycom, Radvision, Sony and several other smaller vendors, said Mann.

Polycom is the largest and has a relationship with another of Cisco's rivals in the online collaboration sector, Microsoft.

Mann said Cisco's acquisition of Tandberg would put pressure on Avaya, Siemens and others in the communications equipment space "who don't have enough cash to go buying companies".

Cisco, HP and Polycom are currently the market leaders in the high-end business sector for high-definition videoconferencing. However, the technology is expensive, requiring dedicated physical infrastructure and rigorous quality of service.

And if videoconferencing is to push down to smaller enterprises and eventually to individual consumers - as De Beer predicts it will - that implies that national broadband infrstructures will be in place to support it.

Ironically, a study published by Cisco the same day as the company announced the acquistion of Tandberg, shows the UK in the third division when it comes to broadband provision.

The study pigeon-holed the UK in the third of four categories, dubbed " meeting needs for today", while the top category, called "ready for tomorrow", contained South Korea, Japan and other Asian countries.

"Ready for tomorrow", says Cisco, means having a network infrastructure able to handle vast amounts of high-definition video calls with the requisite quality of service.

The Cisco-sponsored report also found that network latency, critical for real-time applications such as videoconferencing and IP telephony, had increased by eight per cent since last year in the UK.