Polycom: SMBs, Consumers Drive Video Conferencing

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Polycom's CEO says the company has gained marketshare from rival Cisco/Tandberg. Polycom is expected to enter the consumer and small business video conferencing space soon.

(Reuters) - Polycom Inc (NASDAQ:PLCM), a U.S. video conferencing company, is looking to consumers and small businesses to help it win market share from rival Cisco's (NASDAQ:CSCO) Tandberg unit, its CEO said.

Polycom has 41 percent of the integrated voice, video and web market, and picked up 2 points of market share from Cisco in the first half of 2010.

"Between now and 2014, we expect a consistent market share gain," Chief Executive Andy Miller told Reuters in a telephone interview.

Polycom's expected foray into the consumer market will take it head-to-head with Cisco, with the benefit of not requiring a standalone videoconferencing device.

The company is looking to provide its technology through set-top boxes, TV sets embedded with a camera or gaming consoles such as Microsoft's (NASDAQ:MSFT) Xbox 360. It may also seek to attract consumers through mobile devices, such as tablets.

Last year, Cisco launched its "umi" home videoconferencing product, priced at $599 plus a $24.99 monthly service fee.

"It (umi) is an expensive product, an expensive service. It's not open, it doesn't communicate with other manufacturers and I don't think it's scalable," said Miller, a former Cisco sales chief and Tandberg CEO.

Polycom, which partners companies such as Microsoft, IBM (NYSE:IBM) and Hewlett-Packard (NYSE:HPQ), will provide open-standard videoconferencing through tablets like Samsung Electronics' (KS:005930) Galaxy Tab with the application running in the tablet when it's shipped.

It doesn't expect revenue from this business this year, but it predicts "a growing business" in 2012.

Polycom is looking to tie up with BlackBerry maker Research In Motion (TO:RIM), Motorola (NYSE:MSI), Nokia (HE:NOK1V), Apple (NASDAQ:AAPL), Toshiba (T:6502) and some Chinese manufacturers by next year.

Privately-held rival Skype, which partners LG Electronics (KS:066570) and Panasonic (T:6752), also provides an Internet video service on home televisions.

"It's a great, free consumer product to talk to your relative. The question is: will that technology scale to SMBs?" Miller said, referring to the small- and medium-sized businesses he hopes will help drive sales to compliment existing bigger corporate clients.

"Some will buy from Skype, but there will be many concerned about security, interoperability and how it integrates into an existing platform like Microsoft's," said Miller.

"I think there's plenty of room for both."

Polycom increased its revenue by 26 percent last year, and that should grow by 19 percent this year, according to Thomson Reuters I/B/E/S.