Citing “people familiar with the situation,” the Financial Times reports that the private equity firm Gores Group has approached Polycom (again) about acquiring the videoconferencing vendor and combining it with Siemens Enterprise Networks, the company Gores formed when it acquired a majority stake in Siemens Enterprise Communications in 2008 and merged it with Enterasys Networks.
Gores first approached Polycom in October, the Times says, but its overtures were politely declined. Gores has come calling again because it heard that another private equity firm, Apax Partners, is also in the hunt for Polycom.
When Cisco Systems announced its plan to buy Tandberg, Polycom’s primary rival, last October, industry experts told us that Cisco’s rivals in IP telephony, unified communications and networks would gravitate toward Polycom, forming tight partnerships with the enterprise video company in order to offset the broadened product portfolio Cisco would have to offer in unified communications. That’s definitely been borne out by what we’ve seen this year. Polycom announced partnerships with Siemens and Juniper in January. At VoiceCon Polycom and HP unveiled a new relationship that includes marketing and sales cooperation and some future joint technology development.
Now Gores Group wants to take things past the “friends” stage and establish a true marriage of companies. It makes sense from a technology perspective. Siemens puts out a quality UC and IP telephony product. Its OpenScape UC Server 2010 won Best of VoiceCon last week. The Enterasys division of Siemens is also well-respected for its technology. Its customers tend to be loyal.
But would Polycom want to tie itself to a company with such a small North American presence? Siemens has a sturdy international business, but its still just a small timer in the United States. And Enterasys is such a small part of the IP networking industry in general. One would think that if Polycom were interested in merging with a UC and/or networking vendor, it would set its sites one someone like HP ProCurve or Avaya, both of whom are a much “bigger deal.” Avaya was billing itself as the number one vendor in unified communications at VoiceCon, a claim it can now make since it closed the deal on Nortel Enterprise Solutions. HP ProCurve is the number two enterprise networking vendor out there and its a division of HP, one of the biggest IT vendors in the world. Both companies would bring good technology and good market opportunities to the table in a Polycom merger.
On the other hand, Gores Group might present the best option Polycom has for a strategic merger rather than a straight-up acquisition. We haven’t heard any rumors from HP about it being on the hunt for a video vendor. It’s sole participation in the videoconferencing space is its Halo service. Silver Lake Partners, the private equity firm that owns Avaya, may not be in an acquisitive mood after spending $900 million on the Nortel deal. The Times says the Apax-Polycom have put Polycom’s possible price tag at $3 billion or so. If Gores is prepared to spend that kind of money, it could lead to some interesting things for both Siemens and Polycom customers.]]>
When we reported on the Cisco-Tandberg deal in October, Ira Weinstein, senior analyst with Wainhouse Research, told us that the acquisition would force other unified communications and telephony vendors to embrace Polycom in an effort to differentiate their own enterprise video strategies.
Siemens Enterprise Communications made its move this month, announcing a new videoconferencing alliance with Polycom. As Mike Vizard at CTOEdge pointed out, Tandberg had been Siemens’ go-to partner on video solutions prior to the Cisco-Tandberg deal. Siemens will continue to support Tandberg products with its OpenScape UC products, but Polycom is now its preferred partner.
Yesterday, Polycom picked up an infrastructure partner, too, when it announced a deal with Juniper Networks. In mid-2010, the two companies will release updates to their products that will allow service providers to optimize their networks for Polycom videoconferencing products.
Stacey Higginbotham over at GigaOM says that Juniper’s partnership with Polycom won’t work.
I’m not sure that Juniper and Polycom are an ideal match, mostly because tying the product to the networking gear is a strategy that ultimately follows along with Cisco’s aims. As a smaller rival to Cisco, Juniper can’t win by playing by the same rules as the larger company — it needs to break them.
Regardless of whether Juniper and Polycom’s new alliance works, it’s clear that Cisco’s acquisition of Tandberg has Cisco’s rivals in multiple markets looking to work with Polycom. Not only are other UC and telephony vendors embracing Polycom. Rival network infrastructure vendors are cuddling up to them as well. Competition in the videoconferencing market is alive and well.]]>
Avaya’s acquisition of Nortel’s enterprise division means that a lot of enterprises are re-evaluating their voice and UC infrastructure these days. Cisco and Avaya remain at the top of the heap, but smaller players like Siemens and Mitel will undoubtedly try to take advantage of the inevitable churn that will follow Nortel’s exit from the market. For the first time in many years, Nortel customers are shopping for a new vendor. Nortel customers will be wined-and-dined at VoiceCon Orlando in a couple months, that’s for sure.
With that in mind, it’s worth looking at some highlights of what Mitel has been up to in the world of UC in recent years.
What the paper calls Siemens is probably more accurately described as a joint venture between private equity firm Gores Group and Siemens AG, who together own Siemens Enterprise Communications. Gores Group owns the controlling interest. Those two firms were reportedly working together to bid on the Nortel enterprise division.
If Gores and Siemens won, the plan was to create a new company that combined Siemens’ market presence in Europe with Nortel’s presence in North America into a company that remained headquartered in Canada and offered a strong alternative to Avaya and Cisco, so says The Globe and Mail. In backroom negotiations with Nortel and the Canadian government that kicked off a year ago, before Nortel’s bankruptcy, Siemens had said that it would relocate its own headquarters from Munich to Toronto as part of the merger. Once the bankruptcy auction got underway, Siemens remained at the table.
But ultimately Siemens fell $15 million short of Avaya’s $900 million bid this week. Also, while Avaya’s offer was all cash, Siemens’ offer included $700 million in cash cash with an IOU for the rest. Apparently Siemens was trying to work out a loan from the Canadian government to help pay for the Nortel merger. The government backed away from those loan talks when Canada’s other major tech firm, Blackberry-maker Research In Motion, started grumbling about the prospect of Nortel selling off all of its various divisions to foreign companies, The Globe and Mail reported.
This has to be disappointing news to Canadian technophiles who have always had justifiable pride in Nortel’s status as the nation’s top tech firm. Now, the Globe and Mail reports, Avaya will ship all top executive jobs of Nortel’s enterprise division south of the border, probably to… gasp… New Jersey. And the paper says Avaya will probably cut 25% of Nortel’s workforce, including layoffs of 400 of 1,000 employees at plants in Ontario.]]>
The former crown jewel of Canada’s high-tech industry revealed today that it will sell off its CDMA and LTE wireless telecom infrastructure division to Nokia Siemens Networks (NSN) for $650 million. Nortel also revealed that it will sell of the rest of its assets. According to reports, the CDMA division generates $700 million in annual revenue, which means means that NSN will make back its money inside of a year. NSN has also established a low bar for the sale of all of Nortel’s other business units.
A sale of Nortel’s enterprise telephony and unified communications businesses is will probably follow soon. A couple months ago at VoiceCon Orlando, there was plenty of buzz circulating that Avaya and Siemens-Enterasys were both looking to acquire Nortel’s UC business. Neither of them, according to rumors, are interested in technology. Instead, they want the customer base.
A company that’s only looking for access to installed customers might not be willing to pay much for Nortel’s UC division. However, NSN’s $650 million deal with Nortel is so shockingly low that it has certainly driven down Nortel’s asking price for its UC business. The only question now is whether the price has been pushed low enough for Avaya or Siemens to pull the trigger. If that happens, Nortel customers will find themselves with two choices: They can accept whatever incentives the winning bidder offers Nortel customers to buy into their own products, or they can start looking elsewhere.]]>