LifeSize, Logitech Roadmaps To Converge In Greater UC Push

Video conferencing solutions are seeing higher demand than ever, and both LifeSize Communications and its parent company, Logitech, see their futures in that video demand and the expanding unified communications play surrounding it.

The difference these days versus video and UC sales in previous years, said Craig Malloy, LifeSize's CEO, is the way both channel partners and customers think about video.

"The video communications market is finally in a mainstream state," Malloy said in a recent interview with CRN. "Many resellers that have been making a business out of video for the last 20 years have been serving the early adopter niche market. I've seen five or six successive generations of video product over the last 16 years, and finally, this is a mainstream user demand business, not a missionary sale."

Logitech acquired LifeSize for $405 million in November 2009, part of an ongoing wave of videoconferencing and UC-focused mergers and acquisitions that saw Cisco acquire Tandberg, and, more recently, Microsoft make a play for Skype, and just last week, Polycom acquire HP's video portfolio.

All the while, LifeSize has been an emerging channel story, with VARs flocking to a promise of lower prices on video endpoints and infrastructure products, coupled with higher margins and solution provider incentives.

As of late 2010, LifeSize had more than 1,500 channel partners in 80 countries, and boasts a range of strategic vendor relationships, especially with UC powers like Avaya and Microsoft. Its prices are well below those of higher-end systems from Cisco and Polycom -- LifeSize systems typically run between $5,000 and $40,000 depending on equipment and infrastructure needs -- and LifeSize offers partners usually between 20 to 25 percent gross margin on endpoints.

Beyond even the best-known video vendors, video as a potential sales hook is on everyone's mind, said Malloy, who co-founded LifeSize in 2003 after five years as a senior vice president at Polycom.

"Really, every major IT vendor in the world is making a play in video communication, from software companies to hardware companies and carriers," Malloy said. "This is the beginning of the mainstream in the market, and what we think is a long, profitable run for for video communications not only in the enterprise, but also midmarket and the nascent SMB space. There's a ton of greenfield opportunity for companies like Logitech and LifeSize."

NEXT: LifeSize, Logitech Draw Closer Together

What's coming next, according to Malloy and Eric Kintz, general manager for Logitech for Business, is tighter alignment between Logitech the parent and LifeSize the division, as the combined companies look to capture more of the overall market and even bundle solutions together where there wasn't a channel-friendly opportunity to do so in the past.

Kintz, who joined Logitech in 2009 from HP, drove the LifeSize acquisition. He now manages Logitech's business sales -- including through VARs, systems integrators and direct market resellers like CDW.

"We believe that for Logitech, there is significant growth opportunity for UC at the desktop, and where we can really push in the market to join the position across Logitech and LifeSize as a full solution provider," Kintz said. "That's from telepresence down to meeting rooms and webcams and desktops."

The differences between today's videoconferencing channel and the video resellers of the past, Malloy said, are not only the products themselves but the types of solution providers. Cisco's purchase of Tandberg, Malloy said, opened up Tandberg products to the broader Cisco channel -- something that sped up a move by VoIP resellers and data networking VARs into the video space that was already starting to happen.

Managed services and cloud services will create more recurring revenue opportunities for the channel, and virtualization's role in video communications will change how video infrastructure is sold.

"A video infrastructure sale is going to start to look like an enterprise software sale," Malloy said. "It goes in a platform layer that runs in a virtualized mode, and there are software capabilities you can add on through licensing."

Those changes will also create greater opportunity for Logitech, especially as video communication becomes easier to manage for smaller businesses.

"Cloud will open this SMB market," Kintz said. "We've seen video there but the price performance was still not there for SMBs, and still too expensive in recent years. We're going to start seeing even lower cost endpoints at higher performance levels. SMBs don't usually have an IT manager, and even if they do, it isn't a specialist in videoconferencing. So it needs to be made as simple as a phone call."

According to Malloy, the market will see the first integrated products from Logitech and LifeSize over the next few quarters, as well as better cross-sell opportunities between the two. One example would be integration of HD webcams and LifeSize room systems with cloud services, Malloy explained.

Logitech itself will ramp up as a UC player, Kintz said, but Logitech and LifeSize are committed to keeping their channel resources largely separate for now.

"Although the channels are converging, they are still relatively different," he said. "in my case, it's systems integrators, direct resellers, more PC-specialized VARs. There isn't actually much overlap, so to some extent we need to stay separate with a separate salesforce."

Malloy, for his part, sees the market perception of LifeSize changing for the better. Whereas before the company was usually painted as a midmarket-focused endpoints vendor, it's now recognized -- particularly by channel partners -- as a broader infrastructure player. Products such as the LifeSize Video Center, its video content management appliance, recently saw key upgrades such as HD video content streaming for mobile devices.

"We can walk in and compete against any size deal in the world," Malloy said. "That's an important thing we'd like to make sure our channel partners know."