Telepresence Competition Heating Up (CSCO, JNPR, PLCM)

The ongoing Telepresence effort made by Cisco Systems Inc. (NASDAQ: CSCO) has some new competition from a rival networking technology company as well as from a rival in the video communications market.  While this might not be new competition, it is at least stronger competition that is aiming to keep Cisco from winning this market over entirely as the enterprise market jumps from audio-conferencing to video-conferencing.  Juniper Networks Inc. (NASDAQ: JNPR) and Polycom Inc. (NASDAQ: PLCM) on Monday unveiled a video conference alliance to attack this market.  The effort marks a  newer direction for Juniper and marks a stronger Polycom effort to hold on its phone conferencing franchise as video systems get cheaper each year and as Tandberg gets integrated deeper into Cisco throughout 2010.

Juniper will develop products where its networking gear will work with Polycom’s  video conference systems.  Juniper is less of a one-stop service compared to Cisco, but it has also been a formidable competitor that has been able to grow revenues up through 2008.  The company is a tiny fraction of Cisco by a factor of more than 30, and its revenues in 2009 are supposed to be under 2008 and it is only expected to have growth in 2010 that roughly rivals the 2008 revenues.

The Juniper-Polycom alliance answers our own questions about what Polycom was going to do to address this important market.  Polycom owned a large share of the higher-end conference room audio phones for much of the decade, but the new decade is going to be more about video conferencing rather than just audio-conferencing.  Many analysts and market participants consider video conferencing one of the larger growth arenas in corporate and enterprise IT spending dollars.  The big barrier has been cost and bandwidth, which still seem to get cheaper and cheaper depending upon geographies.  For corporations, governments, and enterprises to be able to lower their costs and time restrictions of air travel, it is hard to argue against the futur3e of this segment.

The only argument today is if these companies have waited too long to get this alliance off the ground.  The reactions here are mixed and may not be tied just to this news, Polycom is down over 1%, Cisco is down less than 0.25% and Juniper is up 0.8% in mid-day trading.

JON C. OGG