Cisco and logitech join forces in videoconferencing services

Videoconferencing: Cisco, Logitech Target the Mainstream

Logitech's acquisition of LifeSize and Cisco's bid for Tandberg are aimed at grabbing market share and expanding sales to more businesses—and even consumers

Videoconferencing may finally be headed for the mainstream. The technology that lets people around the globe hold face-to-face meetings electronically has been around for decades. Yet many videoconferencing products have for too long been glitchy, overpriced, and hard to use.

Yet seemingly overnight, companies including Cisco Systems (CSCO), Logitech International (LOGI), and several lesser-known startups are engaged in a flurry of dealmaking aimed at grabbing more of the market and bringing the technology into more businesses and homes. Cisco on Nov. 16 upped to $3.4 billion its bid for market leader Tandberg (TAA.DE), hoping to win over investors who said the Oslo, Norway-based company is worth more than the initial $3 billion offer. Cisco may also introduce a videoconferencing product for consumers at the Consumer Electronics Show in January, BusinessWeek has learned. And in its largest-ever acquisition, PC accessories giant Logitech said on Nov. 10 it will pay $405 million for LifeSize Communications, a maker of high-end high-definition videoconferencing gear. Shares of Polycom (PLCM), the last remaining videoconferencing pure play, have risen 12.5% since Oct. 28, on hopes it may be the next to be bought.

The deals underscore a growing sense that videoconferencing is finally ready to go from an exotic luxury to an everyday part of business life. Thanks to increased broadband capacity, corporate networks can now better handle bandwidth-hogging videoconferencing sessions. Scores of consumers and businesspeople have sampled low-end options such as those offered by Internet-calling provider Skype, and millions of people now carry powerful laptops and smartphones with the processing power needed to join conferences from anywhere. Cisco has helped increase visibility for videoconferencing by heavily promoting its TelePresence technology, recently in a self-mocking product placement on NBC's 30 Rock.
Everyday Business Use

TelePresence can set a company back as much as $250,000 for a single conference room, but the range of prices is getting ever lower. Cisco CEO John Chambers is buying Tandberg in part because Tandberg is the leader in the larger market for less expensive room systems. On Nov. 9, Cisco announced Intranet software that would make videoconferencing a standard component on corporate Web sites. "We want this to be the place people start their day, and where they spend most of their day," says Cisco Senior Vice-President Tony Bates. "We're in it to win it."

So, it seems, is Logitech. Better known for its computer mice, Webcams, and other PC accessories, Logitech this month snapped up LifeSize, which sells videoconferencing products that range from $2,500 on the low end to tens of thousands of dollars for deluxe models. Logitech plans to use its manufacturing expertise to get better prices on components and make operations run more efficiently at the enlarged company, driving down prices on LifeSize's gear.

Lesser-known players are also trying to make videoconferencing waves. Hackensack (N.J.)-based Vidyo has a software-only offering that some analysts say may put pressure on industry pricing.

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