Last December, in response to rumors, I posted Does Avaya Have a Radvision? That posted offered up some reasons why the rumor that Avaya might acquire Radvision made sense. Now the rumor is Avaya bought Radvision – yet neither company had yet confirmed it. The news rumor broke by an Israeli newspaper (Radvision is based in Israel) called Globes. All based on this one Globes article, additional stories ran later in the day in TMC, NoJitter, Forbes, and eweek. That’s some pretty good coverage for a rumor. Fortunately, for all of those rumor mongers, the story is true – Avaya just confirmed it.
In the transaction, which has been approved by each company’s Board of Directors, RADVISION shareholders will receive US$11.85 per share, valuing the transaction at approximately $230 million. The acquisition is expected to close within approximately 90 days assuming the satisfaction of agreed-upon closing conditions.
But it does make sense! My December post identified the following reasons:
- Avaya is pushing video strong
- Radvision has some great technology, but has stumbled without a key go to market partner since it lost Cisco
- Hints from Avaya CEO Kevin Kennedy
In his NoJitter post, Zeus also points out that Avaya networking could also benefit from the transaction. “Newly appointed network chief Marc Randall has seen first-hand from his days at Cisco the impact that video can have on networking.”. Marc Randall got some love from the media recently in several versions of this story about Avaya’s Virtual Enterprise Network Architecture (VENA) products that he hopes to stem recent market share slipping.
It makes a lot of sense for Avaya to turn-up the volume on video – with Microsoft (Lync and Skype), Google, Cisco, Polycom, and Apple all pushing video so strongly. It is clear that video communication is crossing the proverbial chasm into the mainstream. For additional thoughts on that – see my post at NoJitter: Smile, It’s For You. Avaya and Cisco are the current market share leaders (by a lot) and video has been a big part of Cisco’s story over the past several years.
Avaya is primarily owned by Silver Lake. This investment firm was created to invest in good companies that are out of favor with investors, and then help improve the business. It helped when eBay wanted to unload a significant portion of Skype. It grabbed Avaya, then Nortel, and now Radvision – and the Avaya story (and value?) builds. I’m a bit surprised the deal was cash.
While it seems like Avaya and Radvision are both likely to win from this – who loses? Certainly Cisco won’t like this. Their biggest competitor in unified communications just filled its biggest hole. Not having video hasn’t slowed Avaya much as it recently reclaimed the market share leader position from Cisco. Avaya’s unified communications story equipped with video and networking is far more complete. The other company that probably isn’t too excited about this is Polycom.
Polycom has done well playing the role of the non-Cisco video partner of choice. It established relationships with numerous Cisco competitors. Polycom had been careful not to show favorites. The company was positioned to win most of the video portion of the non Cisco sales. But some feel Polycom got too close to Microsoft over the past few years – most UC vendors are uncomfortable with Microsoft’s moves into voice. Quick Litmus test: A Google query of “Polycom video Lync” yields 4.9 million hits. A query of “Polycom video Avaya” yields 2.8 million hits. The word “Avaya” represents the market share leader in unified communications and a 12 year old brand. The word “Lync” represents a single product from Microsoft less than two years old. Polycom has been all over Lync including being the first vendor to produce Lync endpoints. Polycom CEO Andy Miller was prominately featured at the Lync product launch and there’s been lots of marketing stuff like this video: Polycom and Microsoft Lync – We put the You in UC. Ironically, Radvision beat Polycom to market with a Lync Qualified video solution.
Meanwhile, the UC vendor landscape is rapidly filling with various forms of video not from Polycom. Nearly every major UC client now includes native desktop video features (I collected UC client screen shots here). Last summer, Polycom was featured at the ShoreTel Partner conference. Today, ZDNet wrote: “ShoreTel is building out solutions with inter-operability for desktop video systems to interact with a life-size, video conferencing room set-up.” (no mention of Polycom).
I am not sure if this is good or bad news for Life-Size and Vidyo. They will likely lose Avaya related business, but may pick up some new relationships from other vendors and may also see an increased valuation. Both companies make some great products. Life-size is a division of Logitech.
From what I know now – I give the transaction a thumbs-up, and I don’t think we are done yet with industry consolidation. That’s all I got for now – more to follow I’m sure as Avaya is hosting a briefing in about 5 hours from now.