HD Video Conferencing Heats Up as Logitech Buys LifeSize

By Jessica Davis  |  Print this article Print

Logitech plans to buy HD video conferencing vendor LifeSize for $405 million in cash. The announcement follows news that HD video conferencing vendor Tandberg's shareholders were less than excited about networking giant Cisco's offer to acquire their company. Meanwhile, Polycom's CEO says the deal frenzy points to a faster move for video conferencing going mainstream.

Hours after video conferencing vendor Tandberg’s (OSL:TAA) shareholders failed to approve a proposed deal to be acquired by networking giant Cisco (NASDAQ:CSCO), Logitech International (NASDAQ:LOGI) announced plans to acquire privately held video conferencing vendor LifeSize Communications.

LifeSize offers high-definition video conferencing solutions for the budget-minded, with solutions priced at less than $10,000 and offered through the channel with distribution partners such as Tech Data. Last month the company introduced a sub-$2,500 system called LifeSize Passport, aimed at bringing HD video conferencing to the masses.

PC communications vendor Logitech says it will acquire LifeSize for $405 million in cash—a deal that will give it access to LifeSize’s 9,000 video conferencing customers across 80 countries that span large enterprises to small businesses in verticals including public health care, education and government.

Logitech already offers lower-end Webcams used as peripherals with personal computers, as well as other peripheral products for PCs—used mainly by consumers.

"We expect this acquisition to enable Logitech to extend our leadership in video communication beyond the desktop," says Gerald P. Quindlen, Logitech president and chief executive officer, in a prepared statement. "Together we can make life-like, HD-quality video communication as mainstream and seamless as a telephone, for meeting participants in the boardroom, at their office desk, in a remote-location meeting room, telecommuting from home or on the go with a laptop."

It’s not surprising that LifeSize found itself in play following Cisco’s announced plans to acquire HD video conferencing vendor Tandberg last month. Polycom and LifeSize are the other two significant players in the HD video conferencing space. Polycom was quick to weigh in on the deal, as well, saying that all the action around video conferencing shows that it’s set for the mainstream.

"Today’s news is further evidence that visual communications is on the cusp of going mainstream," says Bob Hagerty, chairman and CEO of HD video conferencing and teleconferencing equipment maker Polycom, in a prepared statement. "We see this as creating additional opportunities for Polycom and our partners as the only independent video solution provider of scale."

LifeSize’s CEO says that this deal will bring video conferencing to the masses faster.

"We believe that together with Logitech, we can realize that vision for all enterprises—private and public—and small and medium businesses," says Craig Malloy, LifeSize co-founder and chief executive officer, in a prepared statement. "Our combined proven innovation can accelerate mainstream adoption of video communication by anyone, anywhere."

The companies say they will pursue existing and new relationships with unified communications, collaboration and VOIP industry partners and competitors to drive the development of an open eco-system for interoperable video communication.

Cisco has been criticized by many for the proprietary nature of its own HD video conferencing solutions, although the company announced earlier this week sweeping changes to its systems to make them both more open and easier to use.

LifeSize will operate as a separate division in its previous headquarters in Austin, Texas, under the leadership of Malloy as the LifeSize Communications CEO, reporting to Quindlen.

LifeSize expects approximately $90 million in revenue in calendar year 2009, with CY 2010 revenue expected to grow between 40 percent and 60 percent, the companies said.

Logitech says it expects the acquisition to be neutral to slightly positive to its operating income (excluding acquisition-related charges) in fiscal year 2011, which ends March 31, 2011, and positive thereafter.

The acquisition is subject to customary closing conditions, including antitrust approval, and is expected to close in December.

Jessica Davis covers the channel for eWeek and Channel Insider. Her technology journalism career began well before anyone heard of the World Wide Web and has included stints at Infoworld, Electronic News/EDN, and the Philadelphia Business Journal. Her work has also appeared on CNN and Forbes.com. She has covered hardware, software and networking, as well as the business side of technology. She has won several journalism awards, including a national ASBPE award for best staff-written column, and was named Marketing Computers hardest working tech journalist on their inaugural list of top tech journalists. Jessica can be reached at jessica.davis@ziffdavisenterprise.com

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