In Its efforts to counter the competitive threat from rival Tandbarg, Polycom Inc. (PLCM) scores a major gain. Hewlett-Packard Co. (HPQ) recently terminated its existing contract with Tandbarg ASA and entered into a strategic agreement with Polycom to sell the latter’s video conferencing products. According to Gartner Inc, the video conferencing market will grow at a CAGR (compound annual growth rate) of 17.8% between 2008 and 2013, rising from $3.8 billion to reach $8.6 billion.
During the last couple of quarters, Polycom is trying hard to expand its business relationship with several original equipment manufacturers and resellers after Cisco System Inc. (CSCO) decided to acquire Tandbard for a consideration of $3.41 billion. The deal is currently awaiting regulatory approval. A unified Cisco-Tandbarg is likely to significantly reduce Polycom’s market share.
The new agreement with Polycom and Hewlett-Packard will be mutually beneficial to both the companies. Hewlett-Packard which currently sells high-end telepresence services can now enter into the much broader video conferencing market. On the other hand, Polycom will further solidify its already strong list of strategic partners and reseller agreement with a company like Hewlett-Packard and help the company gain market share. Management expects to recognize revenue from this deal from the second half of 2010. Both Polycom and Hewlett-Packard have existing relationship with Microsoft Corp. (MSFT).
Earlier, Polycom entered into a partnership with network equipment maker Juniper Networks Inc (JNPR) to jointly sell and manage video services. The joint venture will deliver an intelligent service provider solutions based on dynamic signaling between the Juniper resource control platform and the Polycom call control system. This new product will be available from mid-2010.
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