But LifeSize CEO says future is in SMB space
Cisco’s $3bn acquisition of fellow video conferencing firm Tandberg is likely to see the firm continue to aim its TelePresence suite at large enterprises while ignoring the untapped SMB space, according to communications vendor LifeSize.
The top-end TelePresence suites from the likes of Cisco can retail for hundreds of thousands of dollars, which prices a large percentage of businesses out of the market, LifeSize CEO Craig Malloy told CBR.
“Cisco’s acquisition of Tandberg is another indication that the video conferencing market is geared towards bigger companies,” Malloy said. “The only available market for very expensive TelePresence systems that Cisco sells is very large enterprises. In those very large enterprises, Tandberg was generally the incumbent supplier. Cisco was losing out because they didn’t have a mainstream product line.”
Malloy added that Tandberg’s product line is almost exclusively targeted at very large enterprises and Cisco’s acquisition will help it access those large enterprise accounts.
“The acquisition is an acknowledgement that Cisco didn’t have the product line that spanned the products necessary to cover large enterprises and that TelePresence was only a very niche product,” he said. “With Tandberg, they have a product line that will help them in very large enterprises. But I believe that with the acquisition they have bought last year’s business model, last year’s technology. It’s a very expensive, infrastructure-centric, centralised, architectural approach to the market.”
Malloy said that Cisco did not really have any choice to but to make the Tandberg acquisition. “Cisco’s core business had declined substantially over the last few years, so they needed to go and buy revenue. They’ve paid $3bn for a $1bn revenue stream,” he said. “They were also losing from a sales perspective as Tandberg was keeping them out of the big deals.”
LifeSize offers HD video conferencing platforms and recently unveiled its Passport product, which is aimed primarily at smaller businesses and remote workers. LifeSize Passport is a HD video conferencing system that the company says is one-third the price, size and weight of other systems in the same class.
Passport also offers integration with Skype, offering audio calls to the 480 million registered users. Malloy said that video Skype calls will be added to the system at a later date.
The company is aiming to make HD video conferencing a mainstream business tool, with emphasis on the SMB space. “The biggest untapped opportunity is with SMBs, where there is virtually no penetration of video communications today,” Malloy said. “The value proposition wasn’t there – systems were too expensive, too hard to use and the bandwidth wasn’t available.”
LifeSize does not offer any of the extras such as monitors, chairs and other associated furniture, which Malloy says does not add any additional value proposition. LifeSize Passport retails at £1,829 for the basic model with a second model offering a point, tilt and zoom camera and mic pod for £2,559.
“Video communication is really becoming a mainstream market now,” Malloy said. “We can provide the same TelePresence experience that would have cost $300,000 last year on a device that you can put in your pocket and create a TelePresence environment wherever you are.”