There has been consolidation in the VC market with the acquisition of Tandberg by Cisco. What impact will this have on Polycom?

The Tandberg acquisition by Cisco has brought VC to the forefront. VC is now on top of everybody’s mind. People have been thinking: If Cisco’s making an acquisition in this space, there is certainly something worth considering here.

Thus, as the tide rises around VC, it is certainly good for our competition and for us. Now, the market is going to be bigger with a much sizeable pie for everyone.
In the past, there used to be a plethora of players in the VC market.

But after the consolidation, there are only two big serious players—Polycom and Cisco-Tandberg. Hence customers now have a clear choice.

Over the last couple of years we have expanded and consolidated several strategic relationships with large UC and networking players including HP, Avaya, Siemens, Microsoft, and IBM.

There has been too much hype around immersive telepresence; however the technology hasn’t found many takers. Your comments.

We believe that immersive telepresence has a great future. However, one needs to make a distinction between various types of telepresence solutions available in the market today.

At Polycom we classify the telepresence market into three types:

• The high-end market that we have branded as ‘Real Presence.’
• The standard ‘Telepresence’—which is the same telepresence that most of our competitors offer.
• At the lower end, we have something called the ‘Architected Telepresence Experience’ (ATE). ATE is a customized telepresence solution where the framework is from Polycom but it can be implemented using components from multiple vendors to deliver the solution.

ATE is the segment where we are seeing growth as many customers want to protect their existing investments in VC and yet enjoy the immersive experience of telepresence.

Telepresence didn’t see the adoption as anticipated in 2009 since customers did not want to invest in high-end technologies due to limited budgets.
However, over the last two quarters, we’ve been seeing greater demand for telepresence solutions mainly from certain government accounts and large enterprises. Further, the cost of telepresence solutions has come down during the slowdown—thus making it more affordable.

What kind of interest are you seeing in desktop conferencing? Do you think this may cannibalize the high-definition video conferencing (HD VC) growth?
Video usage on the desktop is growing but I don’t see this growth at the expense of or telepresence. It will be complementary to the other HD VC solutions that an enterprise would deploy. The overall market for VC is growing across the board—be it boardroom solutions, executive desktop solutions or telepresence solutions.

Apart from enterprises, the Government and education sectors are also seeing increased adoption of VC. A pure desktop solution, however, is not meant for the enterprise and is only relevant to the SOHO segment. For any enterprise, you’ll see the entire gamut of solutions. Today, the cost of VC as well as the cost of bandwidth is going down.

What alternative delivery models for VC do you expect to see in the market in 2010—as against CAPEX models?
There are various alternatives available in the market against buying the equipment. Example: If you walk in to a Reliance Web World, you can pay for their VC solution for as long as you want and pay them a certain amount per hour.

You can rent entire rooms that you can use for corporate trainings etc.
Moving forward, people are looking at managed service partners for all aspects of IT including VC. Managed VC solutions are beginning to become a reality in different parts of the world wherein the equipment is installed and managed by the partner.

Customers have started asking for Managed VC and we expect this to start happening today. However, it won’t be a significant part of the market at least this year. Rental options like room rentals or equipment rentals would also be new models that we would see emerging this year.