Cisco buys Tandberg to bring video from boardroom to mobile
Published: 2 October, 2009
READ MORE: M&A | Cisco Systems
In May, Cisco added to the list of six 'new markets' it had identified a year earlier, as the significant growth drivers for its future. It boosted the line-up to about 30, including a strong focus on collaboration and videconferencing, across fixed and mobile lines, and building on its previous acquisition of WebEx. Now it has put more money where its mouth is, acquiring videoconferencing systems maker Tandberg for €2.04bn (about $3bn).
This is Cisco's largest purchase since it bought WebEx for $3.2bn in 2007, and harnessing mobile video applications will be a key focus of the strategy. The all-cash deal represents an 11% premium on Tandberg's closing price on Wednesday, seen by analysts as a bargain considering the strategic importance to Cisco.
Tandberg's Norway operations will remain in situ as a European center of video excellence, but will work closely with Cisco's existing video center in Belgium. The US giant says it will retain the 1,500-strong workforce, and that Tandberg's CEO Fredrik Halvorsen will head a new Telepresence Technology Group, reporting to Marthin De Beer, senior VP of Cisco's Emerging Technologies Group - which has the remit to build on the 30-odd new businesses. Many of these relate to multimedia and mobility, looking to extend the core router business, but also to drive usage of that gear, by tapping into the explosion of mobile and converged data traffic.
Cisco does not break out revenues for telepresence, but says this is its fastest growing product line ever. It will consolidate Tandberg's high end videoconferencing gear with its own line, and look to extend collaboration functions far more aggressively from boardroom and desktop out to the mobile platform.
In 2007, Ericsson acquired Tandberg Television for €955 million as part of its bid to accelerate its move into IPTV.
When Cisco acquired WebEx in March 2007, it signalled a clear intent to take on Microsoft - and in future, potentially, Google - in the burgeoning enterprise market for unified communications (UC), supporting integrated messaging over wired and wireless networks, and using multiple formats from voice to email to IM to multimedia conferencing. Cisco believes the online collaboration software market will reach a value of $34bn, from an almost standing start, in 2013, as part of a broader expansion of converged UC in small and large companies. The move to integrate all forms of messaging and mail, whether wired or wireless, within a common IP-based platform will not only enhance communications but underpin many new business processes and customer-facing activities for corporations, making it highly strategic.
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