Cisco-Tandberg: What It Means to CIs

A service-based model may hold well for some integrators.

It's been a while since the blockbuster merger, but commercial integrators are still figuring out how it has reshaped the industry. Some say CIs missed an opportunity to shape their futures.

More than a year after Cisco paid $3.4 billion for Tandberg in 2009, quickly inserting itself in the telepresence market and sending a message to competitors that the commercial integration landscape had changed, the industry is still figuring out what it all means.

Has Cisco become a trailblazer in an eventual consolidation of the CI world?

Will its presence become an albatross as the combined company tries to make a name for itself with Tandberg’s existing customers and the new ones it hopes to attract through the partnership with the IT giant?

The answers depend on who you ask.

“Cisco is perhaps a sleeping giant in the CI world,” says Todd McCandless, general manager of the A/V division at CI Select in St. Louis. “The IT world is higher on the technology food chain than [A/V is], and it seems like they look at video as being pervasive, so the deal makes sense from their business model’s perspective.

“There certainly is a lot of reticence in the CI world about this deal. It becomes pretty daunting when you see something like this happen,” he says.

Mark Coxon, business development manager at Orange ProAV in Orange, Calif., agrees with McCandless, calling Tandberg “a natural fit” for Cisco.

“The implications of a company like Cisco, whose strength is in network architecture, acquiring Tandberg are huge,” he says. “It can lead to innovations that may allow QOS settings to be set automatically based on connection speeds, minimizing the amount of setup needed to get a system up and running.

“It can allow for a two-way conversation between enterprise routers and the codecs to dynamically adjust these settings based on network traffic, or set them up as constants depending on the level of use of the room or even by a priority level set on the individual conference at its initiation,” says Coxon. 

Calculated Move Pays Off
David Hsieh, Cisco vice president of marketing, Emerging Technologies, says the company was following its traditional route of looking “to capture market transitions with innovative, disruptive new technologies” when it acquired Tandberg.

“In the case of telepresence, we saw a market opportunity to transition to the next generation of video conferencing: high definition, immersive, ‘like being there’ experiences,” he says. “We believed Cisco TelePresence could transform video communications into a mainstream, ubiquitous collaboration tool. The acquisition of Tandberg was a win-win for Cisco, Tandberg and our customers.”

Cisco and Tandberg, as a combined entity, have the broadest family of endpoints, complete infrastructure portfolio, interoperability and cloud services, Hsieh says. For customers, this means more deployment options and the ability to connect with just about anyone.

There were no notable glitches in the integration of Tandberg into the Cisco family, Hsieh says.

“As Cisco and Tandberg shared a complementary vision and product line, we have been very pleased with the integration,” he says. “Cisco’s broad TelePresence portfolio contains a range of video endpoints and infrastructure architecture from immersive endpoints to personal and desktop solutions and mobile PC.”

Cisco has sold more than 400,000 immersive, multipurpose, solution platforms and personal endpoint systems to thousands of customers across a variety of verticals—including food and beverage, financial services, pharmaceutical and health care. Customers include such as Bank of America, Pepsi, Tyco Electronics, BAE Systems and Duke University, Hsieh says.

”Since Cisco acquired Tandberg, we have continued to advance our integration goals by developing features across our TelePresence product portfolio,” he says. “For example, at Cisco’s Collaboration Summit in November, we announced that all Tandberg endpoints will connect natively to Cisco Unified Communications Manager, enabling end users to have one button to push for all telepresence endpoints and helping IT use one infrastructure for voice and video.”

Successful Formula
Coxon compares the Cisco-Tandberg partnership to the Crestron Certified arrangement that manufacturers and Crestron have entered into in the traditional A/V space, “where the certified I/O devices identify themselves and populate values in the Crestron program automatically. The real question seems to be: are these potential advances in the ease of setup and potential increase in quality an advantage or disadvantage to the integrator?”

Coxon says he recently read that more than 80 more of network-based A/V installs are being done by the IT market and wonders what that means for the future of CI. “Could these innovations make us more viable as an industry in the IT space, as they lower the knowledge barrier,” he asks, “or do they make VTC a DIY project for the part time IT guy who is still cutting his teeth?”

Grant Macdonald, owner/president at PeakLifestyles Ltd. in Calgary, Alberta, has “a rather cynical opinion” of the deal, calling it “a non-event” for most small and mid-sized companies because they can’t afford to get in on the telepresence world anyway.

“This news is only of consequence to huge, billion dollar, multi-national companies who can afford to spend tens if not hundreds of thousands of dollars on this technology,” he says. “I don’t consider this relevant to the CI industry. The sad thing is that I saw this equipment installed in companies and the executives who were supposed to use it found all sorts of excuses to fly around the world instead to have their meetings face to face and then find time to enjoy a vacation.

“I truly believe in these technologies but sadly, my experience over the years has made me very aware that availability of technology is not the problem; it’s the application and proper use of technology that is. This is the very reason for my company’s existence,” Macdonald says.

Impact on Mid-Sized CIs
After mid-sized commercial integrators asked their knee-jerk questions about what Cisco’s acquisition of Tandberg means to them, they begin focusing on bigger picture, more head-scratching questions, says Mike Reynolds, vice president and director of engineering at Stage Front Presentation Systems in Savannah, Ga.

Is this acquisition good for me?

“Well, it seems to make sense on the surface. Almost all the VTC systems we have installed lately have been IP-based. I think we only installed one ISDN based system this year,” he says. “Cisco has credibility, a huge market share, and the ability to make things grow. So you shouldn’t have to worry about Tandberg being run poorly or having their image tainted by become part of a non-industry-related company.

“Cisco is heavily based in networking standards. Tandberg’s equipment (in my experience) has been very stable and adheres well to standards. I see very little chance of things changing where compatibility becomes an issue.

Cisco has huge distribution. Will this mean that everyone will have access to the Tandberg product?

“I have been told the product will not be available to everyone and will only be sold to qualified dealers. I like the idea of limited distribution.

Will I now be competing with IT companies for VTC sales?

“Wake up. If you are not partnering with IT companies or becoming extremely proficient in the IP world, you have bigger things to worry about than this acquisition. The IT guys don’t know how to specify projectors, lighting, acoustical treatment, or viewing angles associated with VTC. That’s what we do. IT guys are just another group of people that need our help,” Reynolds says.

“With Cisco and Tandberg both having telepresence systems, it will be interesting to see which one sticks around,” he says. “I may be naïve, but I don’t see enough companies installing telepresence system to support both the Cisco and Tandberg systems.”

There are different levels of telepresense systems and the prices vary, Reynolds says, noting that a typical large system seats six to nine people, requires a dedicated space, requires substantial bandwidth, and is around $250,000, and you need it on both ends.

“I see this as a Fortune 500 company purchase,” he says. “I can’t see many medium-sized companies allocating the needed square footage, adding major network bandwidth and spending a half-million dollars in equipment for a two single purpose spaces. I see small- to mid-sized companies continuing to add VCT capabilities to standard meeting and board rooms. The ability to use a room for purposes other than VTC seems more cost-effective for the mid-level company. The biggest advantage is you don’t have to take your shoes off to be patted down by the TSA.”

Cisco, says Reynolds, is looking to change the way people think about telepresence. “Cisco is now using the term to describe most types of video teleconference,” he says.

Best Buy is selling the Cisco umi, a consumer-based product in the $500-$600 range. Umi consists of a codec and camera you add to your home HDTV. It works well and requires a $24.99 a month fee for unlimited calls.

“The good thing is that consumers will be getting used to VTC and will see the benefit of its use,” Reynolds says. “The bad new is they will get used to a $600 price. It will be interesting to see how the market place reacts to the prices. So start planning your responses for when you customer says, ‘my phone app does that,’ ‘I can buy that at Best Buy,’ or ‘Skype works fine for me and it’s free.’”

Awaiting the Next Move
Cisco has a large investment in video technologies of all types, such as telepresence, video surveillance, streaming video, digital signage and media transformation,” Hsieh says. He sees plenty of ways for integrators to incorporate these technologies in their projects.

“We are very excited about how integrators can combine these individual systems to create compelling new applications,” he says. “For example, we have a retail customer who uses its existing video surveillance deployment to look for shoppers who need sales assistance. They can then dispatch a live sales person and provide customized digital signage content.

“Another customer is using interactive digital signage that can become a telepresence session with an expert with a touch of the finger. Other customers are using their TelePresence systems as live broadcast studios, streaming the telepresence feed through Cisco’s media transformation system to make the live content available in a variety of formats for multiple types of PCs, mobile phone, iPads etc.,” Hsieh says.

McCandless sees video encryption and HD as two areas where Cisco can still make its mark and expects the company to target an acquisition in these areas that’s equally “mature” as Tandberg is in the telepresence market.

“There are definitely other issues for Cisco to consider,” McCandless says. “Cisco isn’t bashful when it comes to acquisition. Right now, they’re playing nice with A/V integrators, learning who we are and what we do.”

He was dismayed that CI firms “dropped the ball a bit” by letting an IT firm set the agenda for them rather than “leading the convergence.”

“Cisco wouldn’t know an XLR if it bit them in the back,” McCandless says. “We’re watching the erosion of the A/V world, and it will eventually be folded into the IT world. All it will take for more of this to happen is for sharp, bright IT companies to go out and hire someone like myself. That will instantly put them in the A/V world.

“Right now, Cisco is trying very strongly to get into video signage. If they don’t do it through acquisition, they’ll just come up with their own system,” he says. “Even in the worst-case scenario, they’ve picked up the top video conferencing company in the world.”

Opportunity Lost?
The CI of the future will need to pay particularly close attention to the multi-platform business models of not only their own organizations but of those of their clients, manufacturers and, in particular Cisco, McCandless says.

“The two converging worlds are symbiotic in nature but only one is the host by which the other survives,” he says. “The key value to Cisco’s move is that it bolsters the need for more vigorous and elaborate infrastructure in which to play host to video that not only exists in the endpoint realm but the streaming and signage world as well.

“The CI industry should have been leading this convergence but unfortunately we spent inordinate amounts of time navel-gazing and not positioning ourselves as true integration artists rather khaki-wearing propeller heads that recently crawled from the mire,” McCandless says.

“With all deference to Cisco, they are the 800-lb. gorilla and this acquisition signals the first shot at a target that has rapidly come closer to their bow,” he says. “There is little downside for Cisco as they sally forth tilting at the A/V windmill, but there is still the issue of integration with audio (yes that requires soldering) and control.  Control that — as evidenced by Crestron’s new Core 3 products — eventually will assimilate with the IT professional world in a language that they easily understand.”

The challenge for Cisco, McCandless says, is to determine how to address the CI network — how to assess their value in the Cisco model.

“There will be culling of the network and savvy CIs will place themselves squarely in the path of the oncoming convergence,” he says. “The A/V industry as a whole has much hope as true integration is an art and it requires multiple manufacturer’s to communicate via multiple languages in one rack.  Integration is also a value that the best CI’s bring to the table. We understand our client’s touch points with technology.  Assembling and moving data is one thing, how we see it, hear it and manipulate it is our world.”

Hsieh predicts a continued growth in the commercial electronics industry towards a service-based model.

“Cisco is committed to working with partners and customers as the industry evolves,” he says. “Cisco’s TelePresence Exchange System architecture enables service providers to develop and deliver a broad portfolio of hosted and managed TelePresence services via a flexible service creation platform and cloud based business video solutions. Service providers can expand their revenue streams by extending their network and conferencing services portfolio with a range of services, including inter-company calls, multimedia conferencing, video interoperability services, recording and streaming, and new high-touch services, such as personalized concierge and white label wholesale services.”

Cisco also offers Public Cisco TelePresence, Hsieh says. Rented by the hour and available globally, Cisco TelePresence Suites can be an alternative to collaborate with other inter-company Cisco TelePresence users.

Public Cisco TelePresence Suites are currently available from a growing ecosystem of partners supported by Cisco in major business centers around the world. These include Marriott International, operated by AT&T, as well as the Tata Communications operated rooms at the Starwood and Taj Hotels.