Nortel, Tandberg Team on Telepresence
Tandberg ASA (OSE: TAA) is turning to Nortel Networks Ltd. to enhance the capabilities of its advanced video conferencing service. (See Nortel, Tandberg Do Telepresence.) Nortel already has a similar partnership with Polycom Inc. (Nasdaq: PLCM). (See Nortel Trumps Cisco? and Cisco, Nortel Tee Off in Telepresence.)
What Nortel brings to the table is a portfolio of advanced managed services -- something Tandberg says it can't currently deliver. "It's not a business we're involved with," said Rick Snyder, president of Tandberg Americas. Tandberg's strength is in the delivery of the actual video and audio, but not in network management services like service level agreements, performance guarantees, and other tools that customers would demand from such a high-end service.
While having extra add-on services will be nice, Tandberg admits that perhaps an even bigger part of this partnership will be using Nortel as leverage to landing more global customers. "If you look at their global reach, plus the fact that they are providing full on managed service capability, I view them as a strategic global partner," says Snyder.
The strategy that Tandberg is taking to potential telepresence customers is a little bit different than that of some of its rivals like Cisco Systems Inc. (Nasdaq: CSCO) and HP Inc. (NYSE: HPQ). Whereas Cisco's service caters mostly to the boardroom of a Fortune 500 company, Tandberg offers a wide range of configurations from low-end to very high-end. (See Tandberg Telepresence.)
Snyder says that Tandberg's telepresence business grew over 50 percent in 2007 compared to the rest of the market which grew in the mid 30 percent range. Much of this he says has come from the enormous success of its personal desktop system of which it has shipped over 6,500 units.
Snyder says that these smaller units with fewer bells and whistles are attractive to customers because they still provide many of the collaborative efforts of telepresence and at under $10,000 per unit, have a much higher return on investment than the full room configurations that run above $200,000.
Compare that to Cisco which announced late last year that it had shipped only its 100th unit. But at $300,000 a pop, clearly for now, Cisco has the high end of the market in its focus, which is something some of its competitors feel is a mistake.
Telanetix for example, goes to customers preaching that a telepresence offering that is more cost effective and appealing to all levels of a corporation will be what the market demands in the future. (See Telanetix Touts Telepresence on the Cheap.)
Meanwhile Tandberg's success selling lower-end telepresence devices seems to back the claim up that cheaper will be champion in the future. With its new relationship with Nortel, its hoping that message reaches a lot more customers.
— Raymond McConville, Reporter, Light Reading