Polycom's vision is a world united by video. The company makes video-conferencing and immersive telepresence (which combines digital audio, video, and content sharing) systems that let users collaborate as if they were in the same room. Its products combine camera, microphone, network connection, and external audio and video devices. The company also offers PC-based phones that transmit both voice and video. Polycom's software enables users to manage conferencing locations and connect with them using ISDN and Internet protocol connections. It partners with the likes of Microsoft and IBM to develop open standards-based products. Polycom gets more than half of its sales from outside the US.
Polycom is taking note of emerging trends in the global video-conferencing industry to expand its focus from premise-based systems for the enterprise and public sector markets to include opportunities in the cloud-based, consumer, mobile, and small and midsized business markets. Its strategy involves developing products for use in hosted (or cloud) environments for its traditional enterprise customers, real-time telepresence and content sharing systems for mobile devices, and products that connect across multiple audio and video devices to target the growing connected home and consumer sectors.
Polycom has benefited from a trend away from circuit-switched telephone networks to Internet protocol (IP) technology, a shift that continues to drive its business. Like its competitors, the company also identified the weakness in the economy as an opportunity for the video-conferencing industry, as customers looked to cut costs by reducing travel expenses.
Overall sales for Polycom were up 23% in 2011 over 2010, with the company reporting increases in both services (39%) and products (19%). Geographically, the most dramatic rise in sales was in Asia/Pacific, where revenues were up 40%. The company touts increased sales volumes and stable average selling prices as primary drivers behind the results. Polycom's profits nearly doubled, due in part to higher sales volumes and better control of expenses. The company continued to restructure, consolidating facilities and moving certain engineering and product management functions to other locations to increase efficiency. Late in 2011 it announced plans to further reorganize the business, including the elimination of about 7% of its global workforce and consolidation of more facilities.
As part of its push to focus its business on unified communications and video collaboration, in 2012 Polycom announced it would sell its wireless handset operations to an affiliate of investment firm Sun Capital Partners for about $110 million.
In addition to organic growth, Polycom uses acquisitions to bolster its product offerings. In 2011, the company acquired video presentation software maker Accordent Technologies. Accordent's software is used by more than 1,200 enterprise and public sector customers to manage live and recorded webcasts and video. The acquisition adds video content management capabilities to Polycom's video-conferencing products, expanding its reach in a fast-growing market. In mid-year the company bought Hewlett-Packard Visual Collaboration (HPVC), bringing the Halo products and managed services business on board. Late in the year, it bought privately held video collaboration software maker ViVu.
The unified communications market is evolving as competitors consolidate. In 2011Avaya purchased Konftel, Logitech bought Mirial, and Microsoft acquired Skype. Polycom stands out as a pure-play supplier of unified collaborative systems, and the company may become an acquisition target. It partners with many of its rivals, including Cisco. In one of the larger acquisitions to date, the Cisco purchase of TANDBERG is expected to put increased pressure on Polycom's products, and the industry as a whole. – less