Cisco-Tandberg Competitors Circle The Wagons

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It will be LifeSize and the smaller players that benefit most from channel turmoil stemming from Cisco-Tandberg, Wainhouse's Weinstein argued.

With so many Cisco VARs out there already -- and many of the most lucrative videoconferencing deployments for both Cisco and Polycom poised to go to large VARs and integrators -- it's smaller solution providers that may be looking elsewhere as a way to separate themselves from the pack.

"If I'm a sub-$10 million video conferencing reseller, I'll have a lot of Cisco partners to compete with," Weinstein explained. "So maybe I find some success looking to Logitech-LifeSize, or to Radvision, or to places that weren't previously my primary area of interest because there's less competition for those products."

For LifeSize, however, merely attracting new VARs won't be enough.

Joe Vitalone, vice president of sales for the Americas, said that LifeSize's goal is to successfully bring HD, telepresence and video conferencing prices down far enough that Cisco and Tandberg can't effectively compete with their offerings.

"Cisco's acquisition was a major statement by Chambers, no doubt. If this were poker, he wouldn't be all in, but he is throwing in a lot of chips," Vitalone said. "But I believe that the industry is going to do better, cheaper, faster products. We're going to democratize videoconferencing for the masses. We don't think that HD should cost $200,000. We don't think HD should cost $50,000. So we like the fact that they're in the space now, validating what we do. We're in a nice position."

LifeSize, says Vitalone, offers partners 25 to 30 percent of gross margins on its video products. The goal with the lower pricing, he explained, is to field thousands of LifeSize endpoints and then let those partners design and offer services, bridges and other forms of value-add on top of them.

Logitech's acquisition of LifeSize helps that goal, Vitalone said, because of Logitech's experience with consumer and low-end video end points. Logitech, plus the introduction of Skype integration for LifeSize's own midmarket products -- an announcement expected in a few months, Vitalone said -- gives LifeSize a wide range of end point options, from consumer to enterprise.

"Our margin level is very attractive," he said. "We've seen some Tandberg partners sense what's coming. They've built their business on higher margins, right? We've added a lot of partners that are retail-oriented, and also added some major distributors that are going to bring serious bench strength."

Vitalone has a long history in the space. He helped architect channel programs at Polycom in the early 2000s as its vice president of sales and business development, when, at the time, Polycom enjoyed 75 percent market share of audio speaker phones and 56 percent market share for videoconferencing products.

Most recently, he was vice president of North America sales for ShoreTel -- a seat, he said, that gave him deeper knowledge and greater visibility into video's role in the expanding unified communications market and how VARs sell in that market.

"Ask major Fortune 1000 companies which way they think the video conferencing industry is going to go. Ninety-nine-point-nine percent of them will say it's going to be commoditized," Vitalone said. "We're going to lead that effort. We're going to drive the cost out of this but not to the point where partners can't make a significant living doing it."Vidyo

If there's another competitor in the video conferencing space making enough waves to get the attention of the incumbent players, it's Vidyo, which emerged from stealth mode in 2007 and has nudged its way into the channel with software-based video conferencing products growing in popularity.

For Rob Hughes, senior vice president of worldwide sales and support at Vidyo, the time is right for the company to snag new channel partners.

"A very large segment of the Cisco population is going to have a video product to sell in the not-too-distant future. That's the part I think is exciting, becuase we have a channel program developed from the very beginning that had a very significant emphasis on maintaining healthy margins," Hughes said. "It's not something new we have to scramble to invent just because Cisco is involved. You get Tandberg channels that had some problems with margins already, and now that's going to be accelerated."

"Vidyo is the most profitable video product they could sell," Hughes added. "Let's just say we don't think that resellers are happy making just the regular 10 to 12 points on what they sell for us."

So far, Vidyo's channel expansion has been deliberately paced: not slow, but not a saturation. Hughes said the company is looking to attract VARs who understand video in the context of the greater UC play, and look at video solutions for their value-adds, not their gear sales.

"I don't see big growth in the numbers of videoconferencing specialist VARs," Hughes said. "Most of the growth will come from hardware-oriented or software-oriented IP telephony VARs. We're starting to talk to the guys who are more desktop-centric about video communications."

Like his friend, LifeSize's Vitalone, Hughes is a well-traveled video conferencing channel executive, having come to Vidyo from Lifesize, and before that Radvision and VSGi. He is also a former vice president of North American channel sales at Polycom.

Hughes and Vitalone have different views from their respective perches -- Hughes sees software- and Web-based video conferencing tools as the wave of the future, Vitalone favors LifeSize's solid state architecture and believes people want appliances in their video infrastructure -- but both agree the Polycom and Tandberg channels are ripe for the picking.

That transformation, each suggested in separate interviews, will be gradual.

"Channels are very conservative. They're not likely to go pulling the plug on stuff super quickly," Hughes said. "The most immediate impact that we've had was the announcement about Sony pulling out of channel marketing in Europe. A lot of those guys were selling Sony specifically to not be selling Tandberg and Polycom, both of which are very broadly distributed in Europe. A lot of guys come to us and say, we don't just want to be another Polycom channel. We want options."

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