HP Bows out of Video Conferencing as Polycom Buys Its Halo Biz

Video conferencing company Polycom (s plcm), is moving upmarket by agreeing to buy the assets of HP’s (s hpq) Visual Collaboration business, including its Halo Products and Managed Services division. This puts Polycom in more direct competition with Cisco (s csco) at the high end even as Microsoft’s (s msft) purchase of Skype squeezes it from below.
But the move also looks like the first indications of cracks in the high-end video conferencing space, as companies weigh the costs versus the benefits of deploying high-end, expensive telepresence when they could offer good-enough solutions via Skype, Polycom or others. Plus, with its LifeSize division, Polycom’s no slouch at providing decent-quality video conferencing. And those are far cheaper, which means workers can actually telecommute from home offices using them as opposed to driving into a satellite office to use the fancy Halo or teleprescence gear. Using a cheaper desktop videoconferencing or even an application on a mobile device makes sense for the way the future of work and communications is heading.
But back to this deal, which was rumored to be worth a paltry $89 million, a real come down for the Halo business. With the acquisition, the two companies have also agreed to enter into a broad strategic alliance in which Polycom will serve as an exclusive partner to HP for telepresence and certain video UC solutions for both resale and internal HP deployments. Additionally, Polycom’s video applications will be made available for HP’s WebOS platform. This could be the beginning of an application as opposed to a high-end video conferencing system.
HP had only just launched a new line of HD videoconferencing products last November, but Polycom is a leader in the unified communications market with a much broader range of UC products that work on Polycom hardware as well as eventually working on other devices. This begs the question of how long Cisco might push telepresence?
The deal will give Polycom access to HP’s technology while extending its reach to HP’s installed base of visual collaboration products, while HP will be able to resell Polycom’s broad range of UC equipment, infrastructure and software. The deal is due to close in the third quarter of this year.