Recently I predicted that Siris Capital would be the winner in the contest to secure Polycom.
It seems I was proven right.
So what happens now?
Mitel is likely to be a little disappointed, but I suspect the $60m in compensation will probably help them feel a little better. One has to assume they will continue on with their strategy of buying up components to build an ever better UC solution. Expect a month or two for the dust to settle before Mitel turns their attention back to M&A. I’ll write more about that later.
New Senior Management
As I discussed in my previous articles, Polycom are a monster in the industry, but they have lost their way a little over the last few years. Polycom the ship without a sail. As a result I think it’s safe to say that Siris Capital will bring in new senior management. Cutting costs is important, but a strong strategy is even more important. Time for some changes at the top.
Time to think
By moving out of the Wall Street orientated quarterly cycle Polycom should have some time to reorganise and build something very interesting without having to worry about the end of quarter madness. This is a very good thing and something I’m sure the team at Polycom are very much looking forward to.
Time to buy
Polycom desperately needs a strong infrastructure and and SaaS story. I suspect the quarterly based business they ran previously made integrating a new business unit, or even building one extremely difficult. Hopefully they now have the time, and assuming Siris Capital are willing to invest some money in the business some money to do so. Here’s my top five thoughts on who they could buy. It should also be noted that Polycom have over $550m in the bank, even after giving $60m to Mitel.
Pexip are by far the strongest independent player in the Video Conferencing Infrastructure business. They work well with Microsoft, a relationship which is becoming ever more important to Polycom, and would immediately make Polycom a major player in the infrastructure business again.
Videxio already have a global Cloud video conferencing business, and know how to deliver these cloud services in a reliable and scalable manner. Acquiring both Pexip and Videxio would give Polycom both pieces of that puzzle.
Zoom have been doing incredibly well, building a very impressive business, and have a ton of momentum in the Video Conferencing Cloud space. For Polycom to buy them would be a huge coup. Whether Eric Yuan and his team want to sell, and whether Polycom could afford it, are however huge questions.
Newly independent Lifesize are doing well as an independent and have some interesting technology, particularly in their Cloud offerings. For Polycom to purchase them, and scale that business would be logical and relatively simple.
Starleaf are now going great guns, particularly in EMEA, and have an extremely robust cloud solution. There is no doubt this would be a great technology purchase for Polycom. Whether Mark Richer and his team are remotely interested in selling is quite another matter, but they would bring a lot of strength to both the building and managing of SaaS solutions.
Microsoft doesn’t play well with others
Always one of the biggest issues with the potential Polycom / Mitel deal was how Microsoft was going to react. To put in mildly Microsoft doesn’t play well with others, and the thought within Microsoft that phone sales were going to put money in the pocket of Mitel, was not acceptable. As a result the rumor mill has been that Microsoft were looking for new friends in that space. The deal with Siris Capital should help patch that back together again.
All in all, it’s a good thing for the industry
I was never a huge fan of the Polycom Mitel merger, it felt to forced, the synergies were about cost cutting, not a 2+2=7 type merging of technology, markets and client solutions. It would have been great for Elliott Management, and almost no one else.
Competition is always the mother of innovation and having a strong competitor to Cisco is good for everyone, including Rowan Trollope and his team, they’ll continue to secure the funds they need to ramp up their business even further internally.
As I rarely fail to mention I’ve been looking at this market for nearly 25 years and I’m more excited about the future than I’ve ever been.
The market is moving rapidly away from Polycom’s old core strengths, toward huddle rooms, and lower cost, higher availability technologies such as those being so successfully pushed by companies like Logitech.
Having said that the opportunity for Polycom to reinvent themselves as a huge services player with some unique technologies and great customer relationships, particularly if they can leverage their Microsoft relationship is great. There are talented people there, with some space, and direction I believe they can do well.