Cisco closes Tandberg purchase

SAN FRANCISCO – Cisco Systems Inc. has closed its acquisition of Tandberg SA, formally ending a tense struggle over the fair value of the Norwegian videoconferencing vendor.

Effective Monday, Tandberg’s product line is now part of Cisco’s Telepresence portfolio and former Tandberg CEO Fredrick Halvorsen is senior vice-president of a new unit of Cisco, the Telepresence technology group. The new group is made up of businesses focusing on telepresence endpoints, back-end infrastructure and Cisco Telepresence cloud services. It is part of Cisco’s emerging technologies group, under the leadership of senior vice-president Marthin De Beer.

Cisco has made video a major focus of its business in the past few years, with its Telepresence high-definition videoconferencing products at the front of the lineup. Tandberg, a longtime supplier of various video products for enterprises, fleshes out Cisco’s midrange lineup. Its high-end TelePresence offerings can cost hundreds of thousands of dollars and are apparently too costly and elaborate to scale downmarket, as Cisco initially intended.

The acquisition was one of Cisco’s most difficult. The company offered US$3 billion for Tandberg last Oct. 1, but that offer did not receive the required support of owners of 90 per cent of Tandberg shares. Two investment consulting companies said Cisco had undervalued Tandberg. The dominant networking vendor eventually raised its bid to 19 billion Norwegian kroner, or about $3.4 billion, and extended its offer three times. On Dec. 3, Cisco declared that owners of 91.1 percent of Tandberg’s shares had agreed to the buyout.

Cisco will also now become the market leader in videoconferencing. Tandberg is the current leader with about 40 per cent share, ahead of Polycom Inc., according to Wainhouse Research LLC.

In an interview Tuesday, Ira Weinstein, a Wainhouse senior analyst, said the deal is good for users of both Cisco and Tandberg videoconferencing systems. “Any concerns a Cisco user had in the past about interoperability or the breadth of the product line have now been addressed.”

Cisco will also be “heavily motivated” to quickly improve interoperability between its platform and Tandberg’s. “Even though we have basic interop today, we should see advanced interop soon. More than just a connection, it would be a stellar experience, as you would expect from a shared platform.”

Since the proposed acquistion was announced several months ago other videoconferencing manufacturers have responded with alliances or acquisitions. Polycom Inc., for example, has formed new or stronger partnerships with Avaya Inc., Siemens Enterprise Communications Group and Juniper Networks. In December, Logitec Int’l. bought LifeSize communications, while two months ago Radvison of Tel Aviv bought high definition endpoint technology from the Aethra Group of Italy. This month Radvision announced the Scopia XT1000 HD room video conferencing room system using that technology.

“Now that Cisco has a product line that runs the full gammut of the videoconferencing spectrum, they’re going to open up the marketing floodgates and start spreading the word about videoconferencing,” Weinstein predicts.”
 
(Howard Solomon writes for Network World Canada)