Cisco closes Tandberg deal as video conferencing boosted

19 Apr 2010

Even volcanic clouds have silver linings: news that Cisco’s acquisition of Tandberg has now been formally approved comes in a week when the need for this technology has never been more apparent.

Cisco completed its US$3.3bn acquisition of Norwegian firm Tandberg earlier today, making the US networking giant the biggest player in the video-conferencing market. Industry analysts say the market had been growing anyway, but the severe disruption to business travel caused by last week’s volcano eruption in Iceland is likely to increase that trend.

The announcement could scarcely have come at a better time, with many parts of Europe continuing to operate a no-fly policy through much of this week. Fredrik Halvorsen, former Tandberg CEO and now head of Cisco’s TelePresence Technology Group, was quoted by Reuters as saying the chaos has led to “a huge spike in usage” of video-conferencing systems.

Events in Iceland apart, the video-conferencing market has been experiencing a perfect storm of its own. The combined effects of wider broadband availability, more competition, simpler and cheaper products have been driving growth for some time, according to many providers. In the past, video conferencing needed separate rooms and dedicated communications links, with systems costing up to €100,000. Now, entry-level systems are available for investment of a few thousand euro.

Video conferencing choices

Buyers are not short of choice. In addition to a newly expanded Cisco, Microsoft has been in this market for the past couple of years with its RoundTable technology and Polycom is one of the few remaining independent video-conferencing providers of scale left in the market.

Consultant Gene Reynolds, in his blog, speculated that the scenario of many executives being unable to attend face-to-face meetings this week is likely to prompt many snap decisions to invest in video conferencing. Separately, the teleconferencing provider Regus is reporting a 38pc increase in use of its services office facilities in the UK since last week. The gas and oil producer Statoil said its video-conferencing rooms throughout Norway – some 1,000 in all – have been in active use since Thursday.

Given Ireland’s additional vulnerability to the air traffic chaos as an island nation, will we now see a similar effect as businesses here find the budgets from somewhere to invest in video conferencing as a priority? Maybe a more appropriate question is whether the spend should be categorised as communications or business continuity.

By Gordon Smith

Gordon Smith was a contributor to Silicon Republic