Polycom’s Legacy

by Dave Michels

I associate Polycom with great phones – first the analog saucers, then the SoundPoint IP phones, and now the VVX series of personal devices. It is not just my opinion either. In recent Q2-15 earnings report the company reported its Personal Devices division was up 25% YoY. This is the result of great phones and great partnerships: many of top UCaaS providers lead with Polycom.

Unfortunately the Personal Devices division is the only area of Polycom that’s growing. Even worse it only represents about 20% of its revenue. The other 80 percent is related to video. Pareto would say, focus on video – so the company recently made three major video announcements:

RealPresence Touch Control. This is a custom tablet-like remote control that is compatible with the RealPresence Group Series, the RealPresence Immersive Studio, and the new Polycom RealPresence OTX Studio. The Touch also facilitates content sharing: just connect the laptop to the Touch Control via USB and then to the Codec via VGA/DVI. It’s a sturdy tablet for $1749 with a 10” display that obtains its power over a wired Ethernet connection.

The road not taken is an app for mass produced tablets. Zoom for example, transforms an iPad into a touch-screen controller for its Zoom Rooms. For screen sharing, Zoom supports wireless sharing – even from iOS devices. This approach means Zoom isn’t burdened with manufacturing, inventory, and distribution. The iPad approach also results with a lower cost to the customer. While Polycom is not offering Touch as an app for iOS or Android, Zoom is reporting triple digit growth.

Polycom announced its new Open Telepresence eXperience (OTX) studio. The solution provides a high-end, immersive, 1080p60 room-experience with “3D voice” technology – now available in a handy four-person size (OTX 100). Think of it as a mini-Hummer. Presumably, this is what CEO Leav intended when he said he wants to increase the addressable market for Polycom, but does the market want a smaller immersive room? 

In the recent Gartner Magic Quadrant for Group Video, the authors said about dedicated immersive rooms: “customer interest in this segment has declined as enterprises seek more affordable and more flexible solutions.” The mid-market is even more price-sensitive than enterprise. The “more affordable and more flexible solutions” are simpler room systems and “huddle” solutions. Attaching A/V peripherals to a laptop no longer represents much of a compromise thanks to quality vendors such as Logitech and Revolabs.

A few years ago Cisco also saw a drop in room systems. The company put more effort into its hardware design, software experience, and integration with its cloud services and it now reports increasing group video sales.

Polycom also announced version 5.0 of its RealPresence Group Series platform. The most touted benefits are seamless integration with Skype for Business and richer audio capabilities. Skype for Business users can now directly access Polycom room systems from the comfort of their own client sans gateways or custom code. Interoperability with Skype for Business is a compelling feature. Several infrastructure vendors such as Acano and Blue Jeans were fairly quick with this. It’s a bit more painful and awkward for client vendors because the products overlap – further exacerbated as Microsoft moves into rooms with its Surface Hub. Several vendors have already announced support for Skype for Business  including LifeSize earlier this year, and Vidyo last year. 

When products overlap, the better UI has the advantage, and Skype for Business has a very popular UI. One analyst describes Polycom’s UI as “meh.” Polycom’s defensive measure could be its Acoustic Fence technology which is included in this latest release.

Incumbent video vendors are under extreme pressure. Disruptive forces such as cloud services, freemium offers, free offers, WebRTC, and new codecs are creating considerable pressure. Industry responses vary.

Cisco’s worked to simplify and integrate offerings such as WebEx, Telepresence, hosted gateway services, and soon Spark – combined with UI improvements, elegant hardware, and compelling Android-based desktop endpoints. LifeSize has bet it all on its new cloud offer, Vidyo focused on APIs, and is rapidly adding new partners and customers in need of video integration.

Video is also on the forefront of the messaging revolution – Acano and Fuze are moving quickly, and several vendors are expanding into video such as Interactive Intelligence and Unify.

Polycom has always been a highly innovative company. Its challenge lies in adapting to modern workstyles. Even its highly innovative phones are … phones – something that progressive companies are doing without. Polycom needs to channel its innovation engine beyond legacy modalities. The company featured click-to-dial in its recent announcements.

I would think Cloud and persistent messaging should be higher on the list.

In other news Polycom’s largest distributor, ScanSource, intends to add over $200 million to its video conferencing revenues with the acquisition of KBZ – a video conferencing distributor that leads with Cisco.

I will say with emphatic conviction: Polycom makes great phones.