Avaya Looking to Buy Radvision for Video Collaboration: Report

Unified communications vendor Avaya reportedly is negotiating to buy Radvision, which makes video conferencing solutions for IP and 3G networks.

In a Dec. 13 report, Israeli business publication Globes said sources indicate that Avaya is in advanced talks to buy Radvision for about $200 million, a move that would enable Avaya to expand into a new market and compete with video conferencing heavyweights like Cisco Systems, Polycom and Logitech s LifeSize Communications business.

At the same time, there also is the possibility that other vendors could jump into the bidding for Radvision, which reportedly has been struggling since Cisco, its largest customer, bought Tandberg for $3.3 billion in a deal that was announced in 2009 but closed last year. That deal gave Cisco a larger product portfolio for midmarket customers, an area in which the company was lacking.

Video conferencing and collaboration is a rapidly growing market that is expected to gain steam over the next few years as businesses look for ways to not only reduce expenses--particularly travel costs--but also to improve employee productivity and develop new ways to communicate with workers, partners and customers.

In a report Dec. 12, market research firm IDC said the enterprise video conferencing and telepresence market in the third quarter grew 24.3 percent over the same period in 2010, with revenues jumping to $680.4 million. In three of the past four quarters, the space grew more than 20 percent, IDC analysts said.

"Only recently have enterprise networks and videoconferencing technology, epitomized by HD and telepresence systems, been capable of delivering collaboration experiences worthy of initiating a video session, versus having a conference call or hopping on a plane," Rich Costello, senior analyst of IDC's Enterprise Communications Infrastructure unit, said in a statement. "IDC expects major revenue growth in this market to continue over the next five years, bolstered by a significant impact from unified communications, collaboration applications, telepresence systems, and desktop and mobile devices supporting video."

Cisco leads the market with 51.6 percent share it was 48.4 percent in the third quarter of 2010, according to IDC. Polycom saw its revenue grow 19.4 percent in the third quarter and has seen revenue growth of 19 to 26 percent every quarter since the first quarter of 2010.

By contrast, Radvision has struggled in recent months. In October, Radvision executives said that the company lost $7.4 million in third quarter, with revenues falling to $17.3 million from $24.5 million the same period last year.

Radvision's decision last year to buy video conferencing hardware assets from OEM partner Aethra for $10 million, in hopes of making up for some expected losses from Cisco's acquisition of Tandberg, didn't pan out and Radvision has continued to struggle.

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