Video conferencing firms worried by Microsoft-Skype deal

Microsoft’s $8.5 billion acquisition of Skype is likely to boost video-conferencing from workers’ desktops, putting real pressure on specialist companies such as Polycom and Logitech.

Video conferencing firms worried by Microsoft-Skype deal

The cheaper end of the $3 billion video-conferencing equipment market is already suffering from inroads that Skype and other video applications are making in the market, historically controlled by standalone conferencing suites in offices.

The pressure on dedicated video-conferencing devices, excluding top-end telepresence rooms, will only increase, according to analysts.

“Some of the more narrowly focused companies will likely struggle,” said Dominic Dodd, analyst at Frost and Sullivan.

Analysts said smaller video specialists would be hit first if Microsoft succeeded in turning Skype into an enterprises tool, while companies like Cisco and Hewlett-Packard, which have wider offerings and focus more on the fast-growing high-end of the market, would be less affected.

“I think we’re well positioned here, but if you haven’t got good, big competitors and good start-ups, you’re in the wrong market,” said Cisco chief executive John Chambers.

However, many smaller companies in the industry said Microsoft’s massive bet on Skype would boost take-up of video-conferencing and create new opportunities for them.

“Skype takes the scariness out of video-conferencing,” said Ashish Gupta, marketing chief at Vidyo, whose software platform is used by HP and Google, among others.

“It makes video-conferencing really obvious and part of everybody’s life. As people use video-conferencing at home they are going to ask for it in the enterprises.”

Polycom vice president Sue Hayden said Skype was a consumer offering that should not affect the enterprise market. “We don’t see the Skype consumer play disrupting the enterprise performance,” she said.

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