Partnering Questions Abound For Polycom Following HP Video Buy

Polycom said Wednesday that its acquisition of HP's Visual Collaboration portfolio and its strategic alliance with HP will be a big positive for the Polycom channel, and will expand Polycom's services and solutions.

But questions still remain about how Polycom will address HP partners going forward, and also what it plans to do about HP's year-old strategic alliance with Vidyo, a Polycom competitor.

Polycom on Wednesday confirmed that it will acquire HP's Visual Collaboration unit, including video telepresence products and managed services, for $89 million in cash.

As part of a broader strategic agreement between the new vendors, HP will now resell Polycom telepresence and video-led UC products exclusively, both for internal HP deployments and through HP's own enterprise services arm. Polycom will also provide software and video applications for use with HP's WebOS platform -- a move that will increase Polycom's presence on the WebOS mobile devices, like TouchPad, that HP is promising.

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Polycom will gain control of the full HP Visual Collaboration portfolio, according to Susan Hayden, executive vice president, worldwide marketing for Polycom's go to market organization. That portfolio, which launched in November and was intended to be HP's major competitor in the video and telepresence market dominated by Cisco and Polycom, includes video endpoints and infrastructure products.

"It's a terrific fit between two industry leaders," Hayden told CRN Wednesday. "That a leader like HP would select Polycom as an exclusive provider of UC solutions, both in terms of internal use worldwide as well as a reseller, we feel they're making a tremendous statement about their confidence in us."

The WebOS relationship has a lot of potential, Hayden noted, as HP's tablet and mobile device strategy around WebOS, which HP gained by acquiring Palm in 2010, comes to fruition.

"The idea here is to provide our embedded software technology to provide that world-class telepresence technology onto platforms like mobile tablets," Hayden said.

Polycom has no immediate plans to cut any of HP's Visual Collaboration products, Hayden said. Polycom also hopes to continue the relationships HP has with channel partners who sell Visual Collaboration, as well as open up those partners to what Hayden called "a whole range of Polycom solutions."

"The combination with Polycom will create the strongest end-to-end UC solutions," Hayden said. "This is very positive for those channel partners."

One of the biggest questions following the acquisition is how Polycom will address HP's relationship with Vidyo, the fast-rising videoconferencing upstart whose scalable video coding technology HP OEMs for the Visual Collaboration products.

Asked about the future of that relationship, Hayden said it was something she'll "allow HP to comment on," but said that with the acquisition, Polycom is buying the relationships that are part of the Visual Collaboration unit as well.

"We will need to see if that's the right solution or to use Polycom [software]," Hayden said.

Next: Vidyo CEO Says No Discussions With Polycom Yet

According to Ofer Shapiro, CEO and co-founder of Vidyo, Vidyo and Polycom have not yet had a discussion. HP did notify Vidyo ahead of the announcement, Shapiro said. He declined to provide details on those conversations.

"I don't know if Polycom would want to continue the relationship with us or not," Shapiro told CRN Wednesday. "Our agreements are such that they cannot be automatically transferred. (Polycom) has not contacted us yet."

Shapiro said he views the acquisition as "very strong validation to the pressure we put in the market on legacy vendors." Vidyo is among a handful of smaller, challenger brands eating into the enterprise video market currently dominated by Ciscoand Polycom.

Vidyo's relationship with HP, Shapiro said, was "just ramping up." Their agreement, made public in June 2010, originally called for both the OEM relationship and future product development between the two vendors. Vidyo software is part of HP Visual Collaboration, and HP was also selling Vidyo's VidyoConferencing platform, running on HP servers, through its services arm.

"Polycom will lose a lot of value if they just shut down the product," Shapiro said, reiterating that the agreements it has with HP do not automatically transfer to Polycom.

The HP business is less than 10 percent of Vidyo's overall revenue, according to Vidyo. Shapiro said he learned a lesson about diversifying OEM and partner relationships from Radvision, where he was a senior vice president until 2004.

Radvision had an OEM relationship with Cisco that at its peak accounted for one than one third of Radvision's revenues. But Radvision has lost a lot of that business following Cisco's 2010 acquisition of Tandberg, and in April 2011 cut its first quarter outlook and said it would make less than half of the $5 million in Cisco revenue it had planned on for the quarter.

Shapiro said Vidyo doesn't plan to make a similar mistake, and won't suffer if the agreement it had in place with HP ends.

"This type of event is why there is no one single partner that is more than 10 percent of our business," Shapiro said.

Polycom, for its part, will continue to grow both organically and by acquisition, said Hayden. The HP Visual Collaboration acquisition is its second M&A move in the past three months, following a March pickup of video content management specialist Accordent Technologies.