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Polycom Acquires HP's Visual Collaboration Business, Partners with Microsoft, and Launches Video Exchange

June 1, 2011 | Howard Lichtman

Polycom_buys_HP.jpgPolycom made a number of announcements today including the acquisition of HP's visual collaboration business for $89MM including the HP Halo network and video managed service organization, a partnership with Microsoft that will natively integrate a Polycom videoconferencing endpoint with Microsoft Lync, the creation of the Polycom Open Video Collaboration Consortium to pass video traffic at high speeds and quality between MSPs and carriers, and a 2-for-1 stock split.  Get all the details and Telepresence Options' Publisher Howard Lichtman's thoughts and analysis.

  • Polycom to Acquire HP Halo and Managed Services, Become HP's Exclusive Partner for Video UC
    Polycom announced it is acquiring HP's Visual Collaboration Business Unit, including HP's Halo products and Managed Services for $89 million in cash, and the two companies have entered into a strategic agreement through which Polycom will become HP's exclusive partner for telepresence and video UC solutions. The two companies have also agreed to make Polycom's video applications available for HP's WebOS platform and TouchPad line.  In a webcast attended by 12,000 globally, HP promised that its visual collaboration customers on its HP Halo collaboration network would be unaffected by the announcement and that the companies have already been developing a roadmap to integrate HP Halo customers but no work could begin until the deal closes on the projected date of August 1st. 

  • Polycom announces the Open Visual Communications Consortium to Drive B2B and B2C Video Communication
    Polycom has introduced  Open Visual Communications Consortium (OVCC), a open video exchange cloud with some of the world's biggest video managed service providers and carriers that will enable visual communications beyond corporate firewalls and proprietary video platforms. The goal of the OVCC is to enable global businesses to connect everywhere and make it easy for millions to communicate via video as simply as they connect by mobile phones.
The plan is for OVCC members to provide secure, standards-based B2B connectivity to organizations and consumers connected to hundreds of service providers in countries around the world, representing the largest global video exchange of its kind. The exchange is being incorporated as a non-profit organization and managed service provider and carrier participants have the ability to include non-Polycom video network infrastructure as well.

As a proof of concept, OVCC members demonstrated the first multi-vendor high-definition (HD) telepresence call to join 18 standards-based systems across 12 service provider networks on January, 28, 2011. Polycom's UC Intelligent Core video network infrastructure served as the foundation for the multi-site call. According to John Poole, Senior Director in the Service Provider Solution Group at Polycom, Phase 1 is expected to be fully up and running by June of 2012 but many managed service providers and carriers could be facilitating connections before that date.

The OVCC is projected to deploy in two phases.  The first phase will provide a federated "meet-me service" where participating video managed service providers will deploy video network infrastructure components including Multi-Point Control Units/Video Bridges and Session Border Controllers under a common architecture that will subscribe to a common dial plan.  All business-to-business video sessions will need to connect through a bridge in Phase 1 and point-to-point connections will not be supported. Phase 2 envisions supporting point-to-point connections but no definitive timeline has been given.

  • Polycom and Microsoft Expand Strategic Partnership and Extend Joint Development Agreements
    Polycom and Microsoft announced they are developing two new breakthroughs in enterprise UC that will expand the companies' joint development and go-to-market activities on multiple fronts. A breakthrough new solution, code-named "Rally," will be the first and only room telepresence solution with an embedded Lync client, and will natively integrate with Microsoft's Office 365 cloud offering, running on Lync Server as well as premise-based Lync systems.
  • Two-for-one Stock Split
    Polycom also announced a two-for-one split of its common stock with a record date of June 15, 2011.

Telepresence Options Publisher Howard S. Lichtman's Thoughts and Analysis

In our recently published Telepresence Options 2011 Yearbook, one of the 2011 trends in telepresence and visual collaboration that I predicted was the increasing interoperability of telepresence and visual collaboration systems through merger & acquisition.  A trend I am calling "Standardization Through Consolidation".  In the 2011 Yearbook article I illustrated the dynamic by discussing Cisco's acquisition of TANDBERG and how that drove interoperability between those once competitive platforms. The 2011 Yearbook wasn't out a month before Microsoft's acquisition of Skype for $8.5 Billion reinforced the trend.  Now we see Polycom acquiring the visual collaboration assets of HP's Visual Collaboration Business Unit which includes the HP Halo telepresence network which connects dozens of Fortune 500 companies at hundreds of global locations.  Polycom took one of my questions during the webcast and announced that they will begin working on interoperability as soon as the deal officially closes which they estimate will be August 1st.  The trend of "Standardization Through Consolidation" appears validated.

What Does This Mean for Vidyo?
HP_Vidyo_InfoComm.jpgHP's Darren Podrabsky (now with Glowpoint) and Rob Scott with Vidyo's CEO Ofer Shapiro via Vidyo at the HP/Vidyo announcement

HP announced a partnership with Vidyo in June 2010 and had just relaunched their visual collaboration business in November of 2010 with the announcement of a suite of solutions built around that partnership and Vidyo's video technologies that use the SVC protocol.  SVC splits a video stream into multiple layers that can be reduced when needed to improve performance over best-effort networks like the Internet and their gear also lowers the cost of video network infrastructure needed for multi-site conferences.  I spoke with Vidyo's CEO and co-founder Ofer Shapiro who didn't seem too worried and, not surprisingly, spun the Polycom-HP deal as validation of Vidyo's strategy around SVC: "It was clear that Polycom had to make a defensive move because Vidyo was beating them inside of HP so the company spent $89MM to stick their finger in the dike".  When I inquired if this was going to impact Vidyo's revenue Ofer explained that no single customer or partner accounts for more than 10% of the company's revenue.

Polycom's Open Visual Communications Consortium

One of the other trends I identified in the 2011 Yearbook was the inter-connection of networks to enable business-to-business video connectivity.  Currently most video deployments are islands of IP where the headquarters locations can call branch offices on the corporate WAN easily enough but business-to-business calls between partners, vendors, and customers on disparate networks behind corporate firewalls requires massive human intervention to coordinate firewall traversal and ensure IP Quality-of-Service tagging and security between different networks.  Because telepresence and video traffic is so delay intolerant exchange providers must make these connections between disparate networks. Each telepresence/video exchange creates archipelagos of IP facilitating connectivity between exchange members. 

Many of the video managed service providers in the Polycom announcement including AT&T, BCS Global, BT Conferencing, Glowpoint, Iformata, MASERGY, Tata, and Verizon already offer exchange services so this offers the opportunity to begin connecting the archipelagos. 

I spoke with Pat Montani, CEO of IP-V Gateways who currently runs the largest telepresence and videoconferencing exchange.  the exchange which is located in carrier neutral telco hotels like Telx currently connects around 100,000 downstream telepresence and videoconferencing endpoints for some of the largest telepresence and managed service providers in the business including CityIS, IVCi, Providea, and Solutionz.  The exchange connects 200 networks.  Pat was skeptical: "How are they going to handle private-to-private traffic?  What is the billing model? What are the costs?"   When I put these questions to Polycom's John Poole, he replied that it would be up to the individual managed service providers and carriers to establish pricing with their individual customers. It will be interesting to see which MSPs begin peering under the OVCC architecture the earliest.  Subscribe to Telepresence Options Magazine where we will be covering video network infrastructure, managed service providers, inter-networking, security and exchange in the Fall issue.

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