“Elvis has left the building” is a phrase that was used by public address announcers following Elvis Presley concerts to disperse audiences who lingered in hopes of an encore. Make no mistake, Andy Miller has left the UC industry.
Polycom went out of its way to make sure of this by implying fraud. The official reason for Andy’s resignation was expense report “irregularities,” minor enough to be “immaterial,” big enough to be unforgivable. A resignation for personal reasons would free Polycom from Miller, but that was unacceptable. The board wanted to leave a mark.
After markets closed on July 24th, Polycom hosted its quarterly financial briefing as planned. This time the numbers weren’t the only surprise. “On July 17, 2013, the Audit Committee of the Board completed a review of certain of Mr. Miller’s expense submissions. The Audit Committee found certain irregularities in these submissions. At the conclusion of the review, Mr. Miller accepted responsibility and submitted the letter,” the filing with the Securities and Exchange Commission states.
And the people rejoiced. Personally, I never met Andy Miller, but my conversations with those that have suggest he was not a well liked CEO.
My interactions with Polycom decreased after Andy arrived. I tried numerous times to get briefings, but the firm seemed to only focus on big analyst firms. I think that was characteristic of the Miller era, attention was given or not – no gray areas. Miller changed Polycom in many ways starting with people. As Wainhouse wrote regarding Miller’s term “within a few months, Miller brought in a brand new management team…In the end, he replaced ~ 40% of the company employees, and put the fear of termination into everyone else.” Not even the executive suite at Polycom was stable, Miller was perpetually replacing his newly appointed senior executives.
Though I didn’t follow Polycom very closely during his term, it was hard not to notice Polycom’s declining significance in an industry it helped pioneer.
Pre-Miller Polycom was an industry powerhouse. Not only was it an innovative engine, but the primary competitor to Cisco’s enterprise video solutions. The enemy of my enemy is a my friend, so Polycom was friends with everyone in the not-Cisco camp. Cisco had a powerful solution for voice and video, so other UC firms strategically aligned themselves with Polycom for video; including Avaya, Mitel, IBM, BroadSoft, NEC, Aastra, Siemens Enterprise, and ShoreTel. Polycom wasn’t just about video either – their SoundPoint IP phones were the gold standard for SIP endpoints. They also had Spectralink (Wi-Fi) and Kirk (Dect). Polycom had been the darling of speaker phones, even frenemy Cisco resold a Polycom saucer.
Miller traded many of Polycom’s video alliances with a thin bet on Microsoft Lync. This partnership gave Lync some UC enterprise credibility, and like a hit of meth gave Polycom a short term rush until reality set-in. First the Lync alliance pushed the other UC vendors away. Avaya bought Radvision. Mitel recently partnered up with Vidyo. BroadSoft, IBM, NEC, and Aastra are all now supporting video more directly. In general, Polycom moved from a strategic ally to partner of necessity. Meanwhile, the MS relationship predictably became distant. Microsoft named four partners for Lync Room Systems (LRS) including Polycom. Six months after the LRS announcement Polycom is the only one that still hasn’t brought its solution to market. At Enterprise Connect 2013, Microsoft featured Smart Technologies in the keynote and LifeSize in its booth. The only evidence of a Polycom partnership in the Microsoft booth was a single CX phone – a device Microsoft designed and Polycom builds and distributes. In the Polycom booth, there was no evidence of Lync whatsoever.
Polycom’s innovation powerhouse slowed, more promises than products. Polycom held a big event last October targeted at financial rather than industry analysts and filled it with vapor (see Much Ado About Polycom). Fortunately for Polycom it has voice products too. Or at least it did. The SoundPoint IP line, the early leader in SIP endpoints, was more or less been abandoned. The VVX line was dormant until about a year ago – the new VVX phones are reasonable devices, but hardly cutting edge. The VVX 600 with camera is just an updated and smaller version of the VVX1500 from 2009.
Polycom built up a new line of Microsoft Lync phones, while Snom just adapted its SIP phones to work with Lync. I’d say that Polycom has lost its cachet with IP phones – Snom, Aastra, Panasonic, even Cisco are doing well with SIP endpoints. Digium, a long-term Polycom partner, now makes its own phones. Though no one firm has really replaced Polycom with the title of SIP endpoint innovator (see Take My Phone, Really).
Miller also ignored the wireless phone division. Yes, Polycom dropped the ball in mobility during a period when there was nothing more important in UC. Both Home Depot and Lowes became former Poly/Spectralink customers. Several UC firms replaced SpectraLink with ASCOM for wireless handsets, including Mitel and more recently ShoreTel. NEC showed some snazzy Android-based mobile enterprise phones at Enterprise Connect 2013. Polycom opted to spin-out the unit while it still had some value, but the sale didn’t go smoothly and both firms ended up suing each other. SpectraLink’s first quarter free from Polycom reported a 20% growth in revenue (See SpectraLink Back in Boulder).
Polycom is also slowly losing its audio conferencing crown. Dolby has very innovative conferencing technologies in the pipeline, and many vendors offer high-end saucer units now. Even Cisco lined up an alternative as Telepresence options reported: “Cisco is partnering with Revolabs to offer a new IP speakerphone to compete with the Polycom starfish. Clearly it must be pleasing for Cisco to make this move against rival Polycom.” Aastra also launched a similar device within its BluStar portfolio.
It’s all just a matter or priorities. A firm can only do so much at a time – so what was a big priority last year? A new logo! Circles are in and triangles are out. At least that’s the intent. A Google image search of “Polycom Logo” still returns a lot of triangles. About a month ago, Polycom celebrated the one year anniversary of its new logo. Too bad CMO Kate Hutchinson who led the project wasn’t there for the festivities. Her executive term under Miller did last a whole two years. She is now a marine biology volunteer overseas. Here’s the old and new Polycom logos, I wonder how many millions were spent on the change:
Miller did do a few things right. As Andrew Davis reported on NoJitter: “Polycom actually picked up market share in Q1-2013, since Polycom’s revenues were down only 11%; Cisco on the other hand was down 22%. Logitech’s financial report cited LifeSize sales declines of 19%.” So yes, the industry has been in transition, and one could argue Miller did the best with the hand he had. On the other hand, Vidyo has been growing steadily (see Vidyo Rising) and Avaya reports Radvision as one of its jewels of growth. Several firms such as Vidtel and Blue Jeans are filling demand for improved video interoperability. The best things out of Polycom were early initiatives such as SVC, High Profile, and software-based solutions – all which were announced before Miller and arguably stalled during his term.
Probably Miller’s best move was his deal with HP. He took HP/Halo out of the market, picked up HP as a reseller and customer, and killed an alliance between HP and Vidyo. However, Polycom rarely mentioned HP in its quarterly conference calls. I don’t think the partnership lived up to its potential.
To be fair, Miller does have supporters. I spoke to one current employee that felt maybe it was time for Miller to go, but that overall he was good for Polycom. That he made some tough decisions through a difficult period, and Polycom was in a better place now. It is hard to know how people within Polycom felt about him, but many outside Polycom have shared their opinions. Especially the UC vendors, many of the executives I spoke to were happy to see him leave as he made partnering so difficult. Polycom’s turnover was a great benefit to its direct competitors. You can find former Polycom talent everywhere… Avaya, Cisco, Mitel, Vidyo.
Polycom isn’t in great shape, but it isn’t a complete disaster. The firm has plenty of cash, a strong brand, and a huge base. If they can rebuild a partnership program (Oracle and BroadSoft would be good starts) and continue focusing on software then things will get better.