Well, it's about time. Logitech made a long-awaited bold move into a new market by acquiring LifeSize Communications, a videoconferencing startup, for $405 million in cash.
Logitech had become a dominant player in the computer peripherals market, thanks to its popular line of mice and keyboards. But the Swiss company has long catered to your average consumer, with some higher-end products aimed at the gaming audience. Despite an immensely strong brand with a laundry list of products filling the shelves at your local Best Buys and Targets, Logitech didn't have much of a presence in the business market or the channel.
Until now. For a relatively low price tag (Cisco Systems recently announced an agreement to acquire Norwegian video communications firm Tanberg for $3 billion), Logitech is making a major play in high-end videoconferencing, which it will undoubtedly market to businesses of many different shapes and sizes. Because LifeSize's videoconferencing products are more affordable than most competitors, Logitech will likely be able to sell videoconferencing offerings to both small and medium-business clients who previously shied away from the costly equipment or used cheap, low-quality Webcams to get the job done.
This isn't Logitech's first foray into videoconferencing: last year it acquired SightSpeed, which specialized in video calling software, for $30 million. But SightSpeed's offering is more along the lines of Skype's videoconferencing for consumers. The LifeSize acquisition is a much different deal; the company focuses on midmarket and enterprise businesses, with special attention to the government and education markets.
As a result, Logitech will have a new line of products that will attract solution providers that already offer the company's line of keyboards and mice. And according to its Web site, LifeSize has a stable of more than 100 channel partners worldwide, from VoIP and data VARs to system integrators, within its Global Deployment Program. LifeSize said its revenue for 2009 is expected to be approximately $90 million. The company also predicts its 2010 revenue to grow between 40 percent and 60 percent.
Overall, the deal will likely be good news for solution providers. Logitech will need more channel partners to help LifeSize products make inroads against larger competitors like Cisco and Polycom. In fact, Michael Helmbrecht, LifeSize's director of product management, told Channelweb.com last month that the company has been taking calls from Tanberg channel partners concerned about potential conflict with existing Cisco partners.
LifeSize, based in Austin, Texas, will continue to operate as a separate division under Logitech. The deal is expected to close by December.