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November 11, 2009

Logitech swoops for LifeSize

$400m deal will create competition for Cisco, Polycom

By Steve Evans

Computer peripherals maker Logitech has announced that it is acquiring HD video conferencing vendor LifeSize in a deal with $405m in cash.

The deal is expected to propel Logitech into competition with the bigger video conferencing firms such as Cisco and Polycom. After Cisco’s proposed $3bn takeover of Tandberg, this move leaves Polycom as the only standalone video conferencing vendor.

Logitech hopes that the deal will enable it to extend its reach in the video conferencing space beyond the desktop. “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,” said Gerald P. Quindlen, Logitech president and CEO.

The move should also see LifeSize improve its reach into the SMB space. CBR recently spoke to CEO Craig Malloy and he said that the video conferencing world has often ignored the SMB space in favour of the large enterprise deals.

“The biggest untapped opportunity is with SMBs, where there is virtually no penetration of video communications today,” Malloy said. “The value proposition wasn’t there – systems were too expensive, too hard to use and the bandwidth wasn’t available.”

LifeSize offers HD video conferencing platforms and recently unveiled its Passport product, which is aimed primarily at smaller businesses and remote workers. LifeSize Passport is a HD video conferencing system that the company says is one-third the price, size and weight of other systems in the same class.

LifeSize does not offer any of the extras such as monitors, chairs and other associated furniture, which Malloy says does not add any additional value proposition. It also uses standard broadband connections to run its HD system, which means firms do not have to spend extra on additional bandwidth.

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When the Cisco acquisition of Tandberg was announced, Malloy told CBR that it was aimed squarely at bigger businesses.

“Cisco’s acquisition of Tandberg is another indication that the video conferencing market is geared towards bigger companies,” he said. “The acquisition is an acknowledgement that Cisco didn’t have the product line that spanned the products necessary to cover large enterprises and that TelePresence was only a very niche product. With Tandberg, they have a product line that will help them in very large enterprises.”

Switzerland-based Logitech says that it will keep LifeSize running as a separate division at its Austin, Texas headquarters. LifeSize is expecting to generate revenue of $90m in 2009 with an increase of 40-60% the following year.

 

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