Andy Miller knows his archenemies Cisco and Tandberg. He worked for both.
The enemy of your enemy is your friend. Until that friend is acquired by the enemy. When Cisco cannon-balled into the videoconferencing market with its $3.4 billion acquisition of Tandberg last April, Pleasanton, Calif.-based Polycom instantly became the biggest pure-play video firm remaining. It also combined the resources of two competitors that Andy Miller, Polycom's chief executive, knows well. Before taking his position as CEO last May, he worked for both of the now-merged video giants.
Miller admits that Cisco's ( CSCO - news - people ) marketing combined with Tandberg's technology will make a powerful foe. And another videoconferencing competitor, Lifesize, also got a boost when it was acquired by Logitech last November. But Miller tells Forbes that Polycom ( PLCM - news - people ) still has two big advantages: open standards, and a friendlier relationship than Cisco's with major players like Hewlett-Packard ( HPQ - news - people ), IBM ( IBM - news - people ) and Microsoft ( MSFT - news - people ).
Forbes: There's been a lot of consolidation in this video conferencing market. Logitech acquired LifeSize and then Cisco acquired Tandberg. Where does that leave Polycom as the last remaining independent video conferencing company?
Andy Miller: Well, we think we're in a great place. It's a large market. In 2010 we see it growing at 15%, 2011 to 23%, and then in a very consistent compounded annual growth rate going forward. But what we think is our clear differentiator in that market is what we call the Polycom Open Collaboration Network, which is a consortium of seven key partners that we will not only interoperate with, go to market with and develop open standards with. Partners like IBM, Microsoft, Hewlett-Packard, Juniper Networks, Avaya, Siemens and BroadSoft.
Tandberg was your biggest competitor, and now they've joined with Cisco to become this monolith in the industry. That must be intimidating, or at least change in your strategy.
Well, clearly it requires a different strategy. Having spent my career at Cisco and Tandberg, I have a unique opportunity to understand the positioning. Cisco is an excellent company. They have a great marketing machine. But there are very successful companies that have competed and been very successful against Cisco in terms of getting market share.
Our strategy is to be agnostic to the platform or the customer--creating open standards. We think we have a great opportunity.
In the long process of acquiring Tandberg, Cisco had to give up their proprietary standard known as TIP. They were forced to adopt the kind of open standards that you're talking about. So does that really leave Polycom with an advantage in "openness?" Or is it now more of a level playing field?
Two things. Time will tell. We've always had a very focused approach to open standards. As a matter of fact, the Polycom product can work with any technology in the marketplace in unified communications. From a Cisco perspective, with TIP now being in a regulated body, our perspective is that there are better mechanisms in terms of providing open standards.
Second, we've aligned with the likes of Microsoft to form the UCIF, which is the Unified Communications Forum, which provided very open standard protocol approach. And we see that playing out in the marketplace and gaining tremendous traction from our customers.
Does the fact that you can partner with these big players in other parts of the enterprise IT world that compete with Cisco, like in other parts of the enterprise IT world, represent an advantage in finding sales that Cisco can't?
When I talk to CIOs or CEOs of Global 1,000 companies, it's very clear they want three things. Most importantly, they want to be agnostic to their existing environments. So if they have a Microsoft Exchange, Live Meeting, OCS environment, IBM Lotus, they want to be able to make sure that the technology they're buying can be embedded and interoperable with their existing technology, and that the vendor, Polycom, be agnostic and interoperable with all those aspects.
If they can do those two things, create an open standard and work with their existing platforms. And third and most important is to offer them technology that has a lower cost of ownership. We can actually reduce the bandwidth requirements vs. Cisco by almost 50% in some cases.
As a former executive of Cisco and as the former CEO of Tandberg, you're in this interesting position where you're now competing against companies that you worked for and led. So what did your experiences at those companies teach you about how to compete with this new big player in the industry?
I've learned a lot of things from my background at Cisco and Tandberg. One is the power of marketing, and Cisco is a great marketing engine. At Tandberg, I learned the power of great technology. Now they have both combined, very good technology and a great marketing engine.
But I've also learned in working for and against Cisco that agility and strategy will win out at the end of the day. So in my role as CEO and president of Polycom, I'm focused on product perfectionism. With the highest quality product and this strategy of Open Collaboration Networks to clearly differentiate us against Cisco, we think we can be very affordable and still win.
So where are Cisco's weak points, as somebody who used to work at Cisco and then has been looking for those weak points for years now?
I think there's an immediate challenge with the acquisition of Tandberg. They have to figure out not only what products will be going forward, what people are going forward. One of the things I learned at Cisco is, and I sat through almost 42 acquisitions, is that when you have an acquisition it causes disruptions. So that's going to be a short-term issue for them, and for Logitech with Lifesize.
But what I really garnered from a Cisco perspective is that they provide multiple product categories. Cisco's video business, is 1/50th of their total business. What we do at Polycom is what we do best. We do high-definition voice, high-definition video, the whole collaborative communications. So we think that we can take the weakness of more of a generalized company from a product technology perspective, and one that frankly, people want an alternative to.
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