Cisco buying Tandberg to boost video presence, penetration

Cisco’s $3 billion deal to buy videoconferencing leader Tandberg is a play to gain instant market leadership in an application that is vital to Cisco. Video consumes bandwidth, and when bandwidth is consumed, people will buy more of it — in the form of switches and routers.

But it’s also an admission by Cisco that it could not successfully stretch its elaborate TelePresence system downmarket. TelePresence started out as room-sized high definition virtual conferencing systems costing hundreds of thousands of dollars, and then gradually got smaller. But Cisco still had a hard time making personal TelePresence budget-friendly, and could not make it a credible competitor to Tandberg and Polycom systems at the low-end, analysts say.

So in the words of Frost & Sullivan analyst Vanessa Alvarez, “if you can’t beat them you might as well join them.”

But challenges still remain. Cisco has to integrate all of the piece parts in its videoconferencing/TelePresence/unified communications/collaboration portfolio to better compete against the likes of Microsoft, which has Exchange as its foundation and features an integrated client.

And Cisco has to continue, and build upon, Tandberg’s penchant for adopting standards for easing interoperability with multivendor videoconferencing gear. Up to now, Cisco has shown little interest in interoperability, analysts say.

“There’s lots of different standards Cisco meets to get [traffic from other vendors’ gear] into Cisco telepresence rooms,” says Henry Dewing of Forrester Research. “But getting it out to anyplace else is hard.”

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