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Tandberg-Cisco VAR turf war unlikely over video conferencing solutions

Value-added resellers (VARs) of video conferencing solutions are likely to see more benefit than loss from Cisco Systems' $3 billion acquisition of Tandberg. VARs and analysts agree that no turf war between Cisco and Tandberg partners will break out.

Value-added resellers (VARs) of video conferencing solutions are unlikely to see a turf war break out between Cisco and Tandberg partners following Cisco Systems' $3 billion acquisition of Tandberg. Instead, Cisco's Tandberg purchase will legitimize the video conferencing market and make it grow.

"Video conferencing [is] a fairly small industry -- about $2 billion a year," said Ira Weinstein, senior analyst and partner for Wainhouse Research LLC. "Now that Cisco is actually going to enter into the mainstream video conferencing space, that means Cisco dollars. That means the Cisco marketing engine. That means awareness, and these resellers view this as the tide go[ing] up for everybody."

"Yes, they're going to get more competition … but a bigger pipeline should compensate."
Ira Weinstein
Senior analyst and partnerWainhouse Research LLC

Although the coziness of the video conferencing channel will probably see an increase in competition once Cisco's vast army of channel partners add video conferencing solutions to their portfolios, that expansion of the market will be negligible for Tandberg partners once they are enveloped into Cisco's lucrative partner program, Weinstein said.

"Tandberg partners bring a huge amount of value to the table," he said. "First of all, they're in with the accounts already, and the video conferencing market is very channel partner-driven. Yes, they're going to get more competition … but a bigger pipeline should compensate."

Because legacy Cisco partners and Tandberg partners are coming to the channel with different specialties, they are unlikely to be in direct competition, according to Janet Waxman, a vice president at IDC.

"I think the partners can actually complement each other," Waxman said. "The rub is going to be telepresence. I don't think the Tandberg portfolio of partners is as big … but I think there could potentially be some good synergies."

But Christina Richmond, a research manager at IDC, cautioned Tandberg partners to prepare proactively for the worst.

"I think there will be more consolidation. I think Cisco is continuing its acquisition of companies that are core to its business," Richmond said. "Mergers are always tough for the channel. Good communication on the part of the supplier is key once the acquisition is finalized, and never, never assume that the channel of the acquired company will come over to the company doing the acquiring just because they bought them."

VARs see growth in video conferencing market

"Cisco has essentially stamped this industry as one that needs to be paid attention to."
Joe Rodella
President and CTORoData

Joe Rodella, president and CTO of Pittsburgh-based RoData, a nationwide reseller of video conferencing and collaboration solutions, said he welcomed the acquisition with the expectation that it will fuel market growth.

"Cisco has essentially stamped this industry as one that needs to be paid attention to," Rodella said. "We've seen their marketing engine. We've taken advantage of their marketing engine…. Ultimately, we all benefitted from that in terms of exposure to the general public and the business community, and I think it'll help everybody. It'll fuel that fire."

Rodella, a Tandberg partner who has owned RoData since 1993, expects legacy Cisco partners to make desktop video teleconferencing systems a peripheral addition to their portfolios, but he is not worried.

"I don't expect the immediate feeding frenzy that VoIP brought," he said. "I do not anticipate that because of other complexities. There's a world of things [resellers] like me know that would go a world toward making the experience unique…. If you need an audio/video multimedia room built, we can design it, build it and maintain it."

Todd Luttinger, president of Providea Conferencing LLC, Tandberg's fourth largest partner, also said he had more hopes than fears about the acquisition.

"Having been an industry veteran for many years, I feel like [video is] finally, undeniably going to be a mainstream technology," Luttinger said. "Overall, this market has never really actualized its potential … because manufacturers still are very small and, in the grand scheme of things, have never really done a great job of creating the market and doing much … mainstream marketing, which Cisco does well."

Although he too expected more competition in the channel, Luttinger agreed that VARs specializing in video conferencing still have little to worry about in terms of turf wars.

"What we've seen over time is this technology still remains so application-oriented that those Cisco VARs have just never gotten it with both the delivery mechanism and the services that go along with it," he said.

That differentiator could also mean that Tandberg partners themselves become an attractive target for acquisition by other resellers.

"Bigger companies with bigger deployments are getting serious about this technology," Luttinger said. "But as that happens, bigger players are becoming competitors -- the Verizons, the BTs, the bigger data VARs like Presidio."

"Maybe we wouldn't be as viable if we were a $20 or $30 million company. I think those stakes are getting higher," he said. "We're not running [our business] to get acquired, but we certainly think there's opportunity there for some very big companies that look to be in the space and look at who's doing it well -- that they can merge with instead of growing it themselves."

Let us know what you think about the story; email: Jessica Scarpati, News Writer

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