Logitech Takes on Cisco, to Buy LifeSize for $405M

LifeSize_logoLogitech, a Swiss maker of peripherals for computers and digital consumer devices, is buying 6-year-old Austin, Texas-based video conferencing device maker LifeSize Communications for $405 million in cash. LifeSize has raised $80 million in funding from Norwest, Austin Ventures, Norwest Venture Partners, Redpoint Ventures, Sutter Hill Ventures and Pinnacle Ventures. It makes high-definition video conferencing systems that use standard broadband connections and IP technologies to connect distributed offices and locations. The deal will put Logitech (s logi) in direct competition with Cisco Systems (s csco) in the hotly contested video conferencing equipment market.
LifeSize is a competitor to Cisco Systems and Tandberg, a Norwegian video conferencing company that Cisco wants to buy for some $3 billion. LifeSize currently has over 9,000 customers and is sold across the world. In a previous post, Stacey pointed out that Cisco’s Telepresence gear “provides an immersive HD experience, is expensive, and is aimed squarely at the high end of the market, where it competes with services such as HP’s Halo. Tandberg gear, on the other hand, is cheaper and aimed at the middle market.”
Tandberg’s biggest competitor is LifeSize. Logitech also owns SightSpeed, a software-based video conferencing product that works with most PC cameras. While SightSpeed and Skype are good for low-end, free video conferencing, most companies want something larger, but don’t want to spend millions. LifeSize fits into that sweet spot, which is why I liked them in the first place.
I first wrote about LifeSize in 2005, when the company was being incubated inside the offices of Norwest Venture Partners, LifeSize’s biggest investor. Norwest partner Vab Goel is a co-founder of the company that’s spearheaded by Craig Malloy. As part of the deal, Malloy will stay at the helm of LifeSize, which will in turn become a division of Logitech.
I was impressed by the company and what it had been able to do. “Using off-the-shelf components, and adding some magical software sauce, these guys have worked out a way to stream HD signals over a one-megabit-per-second connection. I think these are the types of applications which are going to push the demand for broadband,” is what I wrote at the time.
The video conferencing market has exploded since then. Cisco in particular has been touting its vision of telepresence. In his column for GigaOM, Cisco CEO John Chambers said: “High-speed networking enables new human collaboration at a profound level, and such collaboration will radically change the way we think.” Video is part of that change, which is why he spending billions of dollars trying to buy Tandberg.