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Mashup Activity Shakes Conferencing Market

Cisco Systems Inc. is acquiring TANDBERG. Logitech is buying LifeSize Communications Inc.  BT and Polycom Inc. are teaming for unified conferencing offerings. Google Inc. is eyeing the multipoint video conferencing market.

There is a lot of activity happening in the conferencing market lately as vendors scurry to fill gaps in their own offerings and become one-stop shop conferencing conglomerates. But as the big names reinvent themselves and the competitive landscape changes, what does it mean for the conferencing market and how will indirect agents be affected?

Brad Dupee, regional vice president of channel sales at conferencing provider InterCall, is bullish about what this market activity means for the conferencing industry. “All of these deals represent progress in the business,” he said. “The fact that Google is interested in multipoint services is a pretty interesting statement for the business.”

Such progress is very clear in the field, he said. “The combination of audio and Web conferencing was, yesteryear, a missionary-type of sale where you were teaching people what that meant, why it was important, what it replaced for travel, how it could make you have the ability to communicate better on a global basis, etc.,” he said. “Nowadays, it’s an absolute reality with the economy. That’s not just a sales pitch anymore; it’s where business is at.”

Greg Plum, director of channel development at The Conference Group, added that the deals in some way legitimize the services model. “The fact that Logitech saw value in a company like LifeSize tells me this service model for video conferencing is viable and will result in additional revenue streams for channel partners,” he said.

Dupee reminded that consolidation in any market is inevitable and it’s just how providers move into the next generation. That next-generation conferencing market is characterized by a trend toward unified communications with conferencing being a vital component of a comprehensive business communications platform. Gathering all those pieces together is one driver for consolidation among vendors.

Another related driver for consolidation is that the one-stop shop is back in vogue, according to Wainhouse Research Senior Partner Andrew W. Davis, who explained that companies with downsized staffs are avoiding managing multiple vendors. “This phenomenon of one-stop shopping is in some ways analogous to vertical integration, [which] went out of favor a few years ago but is coming back,” he explained.

Cisco’s acquisition of TANDBERG, for example, gives it a wider range of video conferencing products, including desktop systems, as well as network-based switching technology that makes it possible to operate multivendor systems.“Cisco is going to have a lock on a certain high-end portion of the marketplace as a result,” said Dupee.

But it’s not only the upper end of the market that will be impacted by mergers of market leaders like Cisco and TANDBERG. The mergers also will deliver the economies of scale that will enable these players to move down market into the SMB space.

Mike Burns, president of A+ Conferencing, said that’s where Cisco is headed but doubted his company would lose market share to Cisco any time soon, and the networking giant’s presence will only add legitimacy to the market.

Plum agreed it will be difficult for larger providers to unseat conferencing providers serving the SMB space due to the price and service requirements. “The SMB space is certainly price-conscious; however, they are also quite loyal when you take care of them,” said Plum. “That will remain a challenge for a larger enterprise to maintain the level of service the SMB has come to expect.”

In particular, desktop video conferencing, which bridges the gap between a conference call and HD telepresence, should remain an opportunity for competitive providers. “The big boy [conferencing service providers] have a difficult time selling to this market,” Burns said. “They are focused on big minute/revenue accounts,” he explained, adding that, for this reason, he believes the killer apps are flat-rate, unlimited usage audio, desktop video conferencing and team collaboration delivered as SaaS.

Channel Response. What might be more important to an agent’s portfolio than any killer app is diversification. You can diversify your offerings on your own or partner with a master agent or conferencing provider that does it for you. Plum said partners should be cognizant of the different technologies — audio, Web and video — and represent each of the three categories on some level.

“Many times, a conversation starts off about one product, but then migrates to another,” he said. “If agents don’t have a trusted partner who can handle all three, they might suffer.”

Burns agreed that agents should partner with a conferencing service provider that can be flexible to meet each partner’s individual needs. “They should be able to give you different pricing options, special training, billing options, bridging alternatives and branding options,” said Burns. “The indirect channel should be able to have it their way.”

Analyst Davis said consolidation no doubt will affect competition at all levels, and as the consolidated suppliers become more powerful, he expects there will be some consolidation in the channel space as well as partners begin to feel the need to “bulk up” in order to negotiate with more powerful suppliers.

As this inevitable consolidation occurs, Dupee suggested agents make sure they are aligned with the companies that will be the consolidators. Partners should build relationships with companies that have the knowledge and wherewithal identify trends in the market, incorporate new technologies, partner with other providers that will help them address gaps in the market and adequately support and maintain their indirect channel in the process.

Looking for More?
Join us at the Spring 2010 Channel Partners Conference & Expo for a conferencing educational track on Tuesday, March 2, at 9:30 a.m. Sessions include “The Business Case for Selling Conferencing” and “Desktop Video Conferencing for Dummies.” Visit www.channelpartnersconference.com.


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