Cisco Systems is making a bid for Norwegian video-conferencing firm Tandberg–it’s a move to consolidate its teleconferencing strengths, but it’s coming at a steep price: $3 billion in hard cash.
Tandberg is a “global leader in video communications, including a broad range of world-class video endpoint and network infrastructure solutions with intercompany and multi-vendor interoperability.” Basically it makes a suite of video-conferencing solutions that are slightly smaller-scale and cheaper than Cisco’s existing large-scale “telepresence” conference room-sized systems.
The point of incorporating Tandberg’s capability into Cisco is to give a broader range of options to its potential customers, and it gives Cisco access to Tandberg’s own software solutions for managing and creating connections between video conferencing devices at different locations that use different tech. Cisco’s making an all-cash offering to buy all Tandberg’s outstanding shares, and it’s been recommended by Tanberg’s own board of directors, meaning it’s likely to go through sometime early next year assuming it passes through the regulatory process without a hitch.
Teleconferencing is still a relatively big business, despite the growing capabilities of consumer-level desktop solutions like video-messaging over Skype–mainly because the dedicated technology can deliver a higher-quality video experience (Tandberg makes high-definition video devices, for example) and direct user-to-user connections are less likely to suffer the kind of network (or peer-to-peer) dropouts that sometimes make Skype a painful system to use. It remains to be seen how well Cisco does out of this–the company’s last high-profile acquisition, of Flip camera-makers Pure Digital, could well turn out to be a medium-term mistake as small video cameras get incorporated into more devices like Apple’s new iPod Nano. But at least it’s not likely to be the last purchase we see from Cisco–its CEO John Chambers is sitting on a cash pile of over $20 billion.