Very interesting news this morning that
Few things to think about on this one.
Reports of the death of Hardware are greatly exaggerated
A number of people have been stating that hardware is dead and the future of Video Conferencing is all Cloud based at an infrastructure level. This deal seems to prove there is still life in hardware. Of course Acano produces devices brilliantly suited for a world of SaaS. After all the talk about Cloud, the actual compute has to be done somewhere. Acano are obviously right at the front of that.
Cisco are a huge and highly successful company, and the typically buy new technology rather than build it themselves. It’s hard to argue with that model and it certainly works well for them. The Codian platform is now very long in the tooth so Acano was an obvious choice.
Cisco has a huge war chest of cash off shore and can’t bring it back to the US without paying cash. So it make slots of sense for them to buy a UK based company.
There’s more to life than SaaS
Dr Blake and his team have proven that there is more to life than a single minded rush to SaaS. One does have to wonder if the CEO’s who destroyed their own infrastructure business still think it a wise decision, or will have any difficult questions asked by their investors about their strategy.
Anyone who’s read my stuff recently knows I’ve been a SaaS fan, and certainly a low cost device in the meeting room advocate, but this deal shows there’s still money in Hardware at an infrastructure level.
Cisco acquisitions are often the catalysts for consolidation in the market. I don’t believe it’s any coincidence that the Cisco Tandberg deal, the Lifesize Logitechone and the Avaya Radvision deal all happened in short order. It will be interesting to see who gets “merged” next.
What about the resellers?
Many Cisco resellers have been selling the Acano product line for a while. Resellers show the most value to clients when putting disparate systems together and the Acano technology worked very well for many clients. Cisco will now not only own the solution, but will also regain the most important thing for them, Cisco account control. It will also lower the margins for resellers significantly. I suspect there are some glum faces in the major Video Conferencing resellers this morning.
What about Pexip?
All this is probably a mixed blessing for Pexip. It gives them a sense of a valuation, and it shows the space matters. Equally the ABC (Anything But Cisco) crowd now have one supplier not two. But on a negative side the number of potential suitors is low and the sales machine Acano technology are about to unleash formidable.
Polycom have been lagging in the infrastructure game for a while. They have no Cloud offering (how is that even possible in 2015!?!?), and their Hardware infrastructure is uncompetitive. It seems obvious to me they must buy Pexip. It would be a strange negotiation. Both need each other, and no one else needs either of them. Just how does one price that?
It's possible that a few of the Cloud infrastructure providers would have liked the idea of getting under the Cisco wing. I think it's safe to say those hopes, if they ever existed, are well and truly dead.
$700m is a great deal of money even to Cisco, and makes this one of the biggest deals ever in the Video Conferencing industry. For a company a little over 4 years old to produce a valuation like this is remarkable and I warmly congratulate them.
There is an old Chinese curse that states “May you live in interesting times”
The Video Conferencing industry has just hit some exceedingly interesting times.