Logitech announced that it is purchasing Austin-based LifeSize Communications for $405 million. Purchasing the high-end video equipment vendor moves Logitech from the desktop to the boardroom and into the big leagues of video-conferencing.
LifeSize has established itself as a provider of high-definition video-conferencing systems in a nascent, but quickly growing market that is tied closely with the boom in unified communications. It provides high quality video-conferencing over moderate bandwidth connections with systems that range from $8,000 to $12,000 each. LifeSize has over 9,000 customers, ranging from small businesses to large enterprises spanning more than 80 countries.
In the Logitech press release regarding the purchase Gerald Quindlen, president and CEO of Logitech, clarified the vision of the acquisition by saying "Together we can make life-like, HD-quality video communications as mainstream and seamless as a telephone, for meeting participants in the boardroom, at their office desk, in a remote-location meeting room, telecommuting from home or on the go with a laptop."
Logitech is a household name known for computer peripherals like mice and keyboards, and particularly webcams. The operative word there though is 'household'. Logitech is a consumer brand with devices aimed at the consumer market. Purchasing LifeSize allows Logitech to buy its way into the boardroom with an established and respected line of video-conferencing products.
Competition at this level is pretty fierce and the competitors are tech giants. Logitech will have to compete with companies like Cisco, and HP to earn the right to sit in the corporate boardroom. Cisco TelePresence and HP's Halo are sort of the luxury 'Rolex' version of boardroom video-conferencing right now, but Logitech and LifeSize may be able to build a solid value argument for organizations that want more cost-effective conferencing solutions.
Cisco has actually made a move to expand its video-conferencing footprint with the purchase of Tandberg. That $3 billion acquisition is still in the works though and has run into a few snags along the way. If and when that deal is finalized, Cisco will have an even stronger video-conferencing portfolio to add to the virtually endless list of unified communications and collaboration solutions it has in its arsenal.
It remains to be seen if Logitech can actually play in this league. Obviously, LifeSize has already experienced success and built a reputation, so Logitech is buying some credibility in that regard. But, Logitech does not have the established enterprise relationships and distribution channels that Cisco and HP have.
Logitech could conceivably leave HP and Cisco to fight over the global, Fortune 100 companies and focus its attention on the much larger market of small and medium businesses that don't have the budget for HP and Cisco solutions.
The acquisition of LifeSize could also make Logitech a potential partner (or acquisition target) for Microsoft. Microsoft is a heavyweight in the unified communications and collaboration arena, but Microsoft is focused on developing the software solutions and partnering with outside vendors on the hardware side. Microsoft does have the Roundtable video-conferencing camera, but hooking up with Logitech could give it a much stronger position in the video-conferencing side of things.