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Why do you see Tandberg as such a good fit? They're the market share leader for sure, but there are other companies in the space with rich channel plays.
We looked at a lot of companies, and would say that beyond the table stakes of the technology, the leadership and the culture of Tandberg is so similar to Cisco.
We never acquire any company for the technology they have today but for the people that can help us create the next generation of where we want to go. Tandberg fit that to a T. What was risky about this is that they're Norwegian and London-based, and we've been shy about acquiring big companies outside of where we are, more than a few time zones away. In fact, this is the first public company we ever bought outside the United States. We took that risk -- and the reason John [Chambers] and the board was willing to sign off -- was that both of these teams are passionate about culture. We have the best two teams in the world that believe in using this technology. I'm putting my two top leaders in TelePresence over in Europe for a year and some of their leaders are coming to San Jose for the first year so there will be some cross-pollination as well.
Some of your competitors are circling the wagons and looking at ways to entice channel business away from Cisco-Tandberg. Polycom is perhaps more of an apples-to-apples comparison with Tandberg, and LifeSize is a different animal, and one that would paint Cisco-Tandberg has having HD presence systems that are too expensive and thus unrealistic for many customers. How do you respond to that?
It depends on what they mean by expensive. If you're a business buyer, I wouldn't call $199 expensive. Tandberg combined with Cisco has a very complete product line from the very high end to the very low end, and we will continue to innovate and drive down price points.
One product we've talked about publicly but haven't announced is our home telepresence solutions. That play in the channel will not be to sell to consumers -- that will be through retail -- but it's a business-to-consumer play that's so attractive to our business customers. You're talking about millions of endpoints, not just a few thousand. If you can now deliver video and connect to your accountant, or your doctor, right into the home, it's a lot like what we saw with e-commerce in its early days. This is an e-services model delivered to your home.
In the channel, video became a services play a few years ago; you're not going to enter the market selling only endpoints anymore. Can you give some key examples of the play for VARs beyond basic video endpoint re-sale? Is it hosted services? A managed model?
I think they can go deeper than they have been going because in many cases, if you rewind 5 years, they were resellers of video conferencing. Now, they can work with customers to create new value by innovating to deliver new experiences. HD, the availability of the network, the fact that it's based on UC, these make it easy to transform experiences. A number of [partners] will go much deeper, and a number will go wider as well, picking up digital signage, or maybe video surveillance. The good ones will go not just deep but wide and connect, on a horizontal plane, these businesses as well. I think all of that will come into play, whether you add more specializations, both top and bottom line for partners.
As video also becomes more affordable for SMBs and the partners that service them, what are the plays there? I know we've talked before about managed video services through the cloud.
To expand a little on your previous question as well, services have to be part of the equation. You can't just resell the box, you really, truly have to deploy it the right way, and make sure the network is ready for it, then create the right experience that will truly solve the problem that customer has. It'll be a lot about how they can do business in a virtual model that helps them be more effective and helps them scale. That's where both the on-prem[ise] and/or the hosted solutions deliver. If you think of B-to-B services delivered by carriers it's very expensive, but with new options, it'll be a lot less expensive and there'll be opportunities for partners to take video outside the firewall for all companies.