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Cisco Acquires Tandberg: What Does It Mean for HD Video?

By Carl Ford, Partner, Crossfire Media

What does “consolidation” normally mean?

 

Video has always been one of the most fragmented marketplaces. Corporate conferencing is at the core of the video innovation in telecom, but broadcast video has also been delivering innovative services since the deployment of fiber in the carriers’ networks enabled the Negroponte Flip.

 

However, the use of codec technology has enabled a new level of expectation from the end-user for broadcast quality – any time, any place, anywhere.

 

The standards of video quality are very high, and the HD video market continues to demand quality – and cheaply. Cisco’s (News - Alert) acquisition of Tandberg may signal an effort to blend the world of broadcast distribution with video collaboration.

 

“What was really missing is the fact that the vast majority of communications and interactions isn’t one-to-one and isn’t voice or data,” Cisco head John Chambers (News - Alert) said of his company’s $3 billion acquisition. “It’s many-to-many.”

 

While much of Tandberg’s (News - Alert) technology overlaps with Cisco’s existing platform, it’s unclear that the blend will be dominated by one partner’s technology. The statements seem to indicate a goal for future capabilities that may represent pent-up demand for collaborative broadcast services.

 

The deal also has implications for the practical side of Cisco. The deal – which closes in 2010 – eliminates one of Cisco’s major competitors while adding to the portfolio of services for small- to medium-sized businesses that are more cost-effective. From the perspective of Tandberg, the merger adds a channel and sales force that normally connects with a more strategic approach.

 

The $34 billion marketplace consolidation leaves opportunities for many other companies. For example, Major Networks and Samsung (News - Alert) each have made inroads into delivering alternative services using off-the-shelf HD equipment, making video collaboration more affordable.

 

In the end, the merger indicates that a change in video solutions is taking place and new markets are developing for the technology.

Carl Ford (News - Alert) is a partner at Crossfire Media.

Edited by Michael Dinan