Cisco, Polycom, now Avaya… is Vidyo the true disruptor of video conferencing space?

editor's corner

Radvision (Nasdaq: RVSN) shareholders approved the sale of the Israeli company to privately held Avaya for $230 million, changing the competitive mix in the high-end vidceoconferencing space.

The transaction is subject to the normal closing conditions, including an Israeli law that mandates a waiting period of at least 30 days after sharholder approval.

Avaya said it expects to complete the transaction during the second quarter of 2012.

The deal gives Avaya a strong presence in the videoconferencing market at a time when that segment is sizzling.

For Radvision, founded in 1992, the deal is an opportunity to climb out of the hole it has been struggling in since Cisco (Nasdaq: CSCO) bought Tandberg.

Before the sale, Radvision had been a major technology partner with Cisco; at one point, sales to Cisco made up about 40 percent of Radvision’s revenues.

Radvision has worked hard to dig out over the past several quarters, but has struggled to establish itself as a stand-alone provider of videoconferencing systems, especially in the critical North American market, despite its solid Scopia product line.

And, after what looked like a turnaround fourth quarter of sorts–it beat analysts estimates easily on sales and earnings–Radvision issued first quarter earnings that were soft at best, with revenue and earnings well below what analysts expected.

Radvision’s Scopia platform offers an array of endpoints across the value chain. It faces stiff competition in the segment from market leaders Cisco and Polycom (Nasdaq: PLCM), which also target high-end teleconferencing customers.

Avaya said Radvision’s enterprise video infrastructure and endpoints will be integrated with Avaya’s Aura Unified Communications (UC) platform.

All three companies face a challenge from upstart Vidyo, which last week reported it had seen a banner year in 2011, with sales that were up about 82 percent. And, while you might want to apply the law of small number here, as Vidyo was just getting rolling a year ago, there’s no doubt the market has taken a shine to the newcomer.

It’s already rolled up more than 1,850 customers, from Google+ hangouts to Canada’s huge Ontario Telemedicine Networks. The company is making hay in the market because it has a solid product, and a price that’s a fraction of its bigger competitors.

As Frost & Sullivan analyst Roopam Jain said last week: “In terms of innovation, technical excellence, scalability and adaptability to varied videoconferencing environments, the VidyoConferencing suite of solutions is impressive and market disruptive. Vidyo’s technology allows new entrants a low barrier of entry to create new, differentiated and cost-effective applications at a desired price performance.”

Of course, Vidyo’s not alone in the disruptor category, as several other companies are push hard, both up and down the value chain to differentiate themselves.

But Vidyo’s play is somewhat unique, it’s differentiating from the big boys who sell their service on quality by offering similar quality at a better price. And, it’s appealing to cost conscious buyers by offering differentiated quality.

It’s going to be an interesting year in the space. –Jim

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