Cisco Ramps Up Video Conferencing Market Share

Cisco Systems continues to dominate the enterprise enterprise video conferencing market, despite the sector witnessing a significant slowdown in growth in the first quarter.

This was thanks in large part to weakness in such areas as immersive telepresence, according to market research firm IDC.

Telepresence Doubt

The numbers, released 29 May, add to a growing debate in the industry over the future of telepresence systems. Cisco and Polycom are the clear leaders in the space, but some have argued that the expensive conference-room systems are being challenged by more cost-effective software offerings from smaller vendors that enable users to collaborate via a wide variety of devices, from desktops and laptops to smartphones and tablets.

That trend has been underscored in recent months by aggressive software pushes from both Cisco and Polycom as well as the success of such smaller companies like Vidyo, which saw an 82 percent jump in revenues in 2011, according to IDC analysts.

“The high-end, immersive telepresence market has been taking a hit lately as lower-cost, HD-quality video solutions, along with a range of new video deployment options for customers, have emerged,” Rich Costello, senior analyst for IDC’s Enterprise Communications Infrastructure business, said in a statement. “We still expect overall positive video market growth for the next several years though, driven by the impact of video integrated with vendors’ unified communications and collaboration portfolios, and with increasing strength among small workgroup, desktop, and mobile collaboration users.”

Overall, revenue in the video conferencing market in the first three months of the year grew 14.4 percent compared to the same period in 2011, significantly less than the 23 to 25 percent growth seen in the previous three quarters, according to IDC. The single-codec telepresence and personal video conferencing segments grew 28.5 percent and 52.6 percent, respectively.

However, revenues in the multi-codec telepresence market segment fell 38.7 percent in the first quarter, which was the fifth consecutive quarter of revenue declines in the immersive telepresence space. IDC analysts said the revenue declines were evidence of video pushing down market into enterprises, which are looking for less complex and more affordable options to the large immersive telepresence offerings, which can cost hundreds of thousands of dollars.

Greatly Exaggerated?

Rivals of Cisco and Polycom have been vocal in recent weeks about what they see as a bleak future for immersive telepresence. In a 3 May column on Forbes.com, Jeff Cavins, CEO of FuzeBox – which offers cloud-based video conferencing and telepresence services – said the cost and complexity of systems from Cisco and Polycom are being challenged by less costly alternatives.

Michael Helmbrecht, vice president and general manager of video solutions at LifeSize Communications, owned by Logitech, agreed in a 14 May post on the company blog. “So why is telepresence becoming obsolete,” Helmbrecht asked. “The answer comes down to the two most valuable aspects of any company’s business: time and money.”

However, Zeus Kerravala, principal analyst with ZK Research, argued in a 9 May post on the No Jitter blog site that while interoperability and the cloud will lead to less complex and less expensive alternatives, Cisco and Polycom have the engineering capabilities to continue improving their products.

“The real question to be asked here is whether there is enough innovation left in telepresence to allow Polycom and Cisco to stay ahead of the commodity curve, and I think the answer to that is yes,” Kerravala wrote.

That said, executives from both Cisco and Polycom have pushed stronger software-based messages in recent months. Most recently, Cisco on 24 May announced it was ending investment in its Android-based Cius enterprise tablet, with O.J. Winge, senior vice president of Cisco’s TelePresence Technology Group, writing in a post on the company’s blog that the bring-your-own-device (BYOD) trend is changing how people collaborate. Given that, Cisco will continue to build up its software offerings, such as the Jabber unified communications (UC) platform and WebEx online meeting solution, Winge wrote.

“Moving forward, we intend to double down on software offerings, like Jabber and WebEx, that provide the any time, anywhere, and any device experiences,” he wrote.

For its part, Polycom for a year has been shifting away from hardware to software, a transformation highlighted in its new rebranding efforts announced 24 May.

Video Growth

Despite the telepresence issue, Cisco, which saw revenue jump 30.7 percent, is continuing to lead the video conferencing market, growing its share from 44.3 percent in the first quarter of 2011 into 50.6 percent in the first quarter this year, according to IDC. Polycom saw revenue in the quarter fall 8.9 percent in the quarte, with its market share dropping from 33.1 percent last year to 26.3 percent in the first quarter this year.

Revenues for LifeSize, the world’s third-largest player in the space, grew 2.3 percent, with market share sitting at 5 percent. Teliris followed with 2.6 percent share, and Vidyo came in with 2.5 percent share, IDC said.

“Despite the 1Q12 performance that was somewhat below expectations, especially in comparison with the results witnessed in the previous three quarters, the enterprise videoconferencing and telepresence market remains one of the fastest growing networking technologies,” Petr Jirovsky, senior research analyst for IDC’s, Worldwide Networking Trackers Research group, said in a statement. “The enterprise videoconferencing and telepresence market continues to place high on the list priorities for many CIOs.”