Examining Cisco's $3 Billion IP Video Purchase

By: John Honovich, Published on Sep 30, 2009

Cisco has purchased a Scandinavian IP video manufacturer for $3 Billion USD - and it is not Axis. The purchase is for the videoconferencing market and the acquired company, Tandberg, is one of two market share leaders in videoconferencing (the other being Polycom).

The videoconferencing market has interesting parallels to the IP video surveillance market. Both markets are approximately $2 Billion USD currently and project double digit growth over the next 5 years (read an overview of video conferencing market statistics).

While IP video surveillance has a larger existing market to supplant (analog video surveillance), video conferencing has more upside for long term disruption. For instance, Gartner predicts that video telepresence will replace 2.1 Million airseats per year by 2012, costing the travel industry $3.5 Billion annually. By contrast, IP video is much more of an incremental improvement over analog video surveillance and is unlikely to have that type of long term business impact.

Details on Acquisition: Cisco paid approximately 3.5x revenue for Tandberg ($204 Million USD revenue in the most recent quarter). Tandberg had been significantly impacted by the recession with growth dropping from double digits to flat over the last year. The acquisition price was only 11% over the current stock price, a very modest premium.

Sign for Axis?: Given that this is a large investment in a relatively small market for a company based far from Cisco's headquarters (Chambers notes this in an interview), there are interesting parallels to Axis.

Will Cisco try to buy Axis? I have no idea. However, it certainly makes more sense than the recent Pelco speculation and would provide a company in a similar position in IP video surveillance to Tandberg's position in video conferencing.

[Update 2012: Cisco has not purchased any video surveillance manufacturer.]

Comments : PRO Members only. Login. or Join.

Most Recent Industry Reports

Security Dealer 'Social Media Contractor' Program on Jun 25, 2019
A $20,000 video surveillance system can be yours for free if you are willing to post on social media about the security dealer. Good deal, bad...
Axis Live Privacy Shield Analytics Tested on Jun 25, 2019
Privacy is becoming a bigger factor in video surveillance, driven both by increased public awareness and by GDPR. Now, Axis has released Live...
Directory of 55 Video Surveillance Startups on Jun 25, 2019
This directory provides a list of video surveillance startups to help you see and research what companies are new or not yet broadly known. 2019...
Hikvision ColorVu Camera Tested on Jun 24, 2019
Hikvision says their new ColorVu line captures "vivid chromatic images in darkness", with unconventional white light illuminations whereas most...
China Subway Facial Recognition System Examined on Jun 24, 2019
A China city of 6+ million people has installed facial recognition-enabled gates in subways, allowing commuters to enter stations by simply showing...
HID Mobile Tested on Jun 21, 2019
HID Global is one of the largest access brands, but their mobile access has had challenges. Indeed, the company has already restructured their...
Genetec Beats Milestone For IHS #1 on Jun 21, 2019
For years, Milestone has touted that they are the #1 VMS. Now, Genetec has beaten them in IHS rankings. But what is this? Even other manufacturers...
Risk of Amazon Alexa Guard: No Battery Or Cell Backup on Jun 20, 2019
Amazon positions its Alexa Guard Service as a "smart home security system" and says it can help you "keep your home safe". However, the...
Exacq Remote Cloud Access Tested on Jun 20, 2019
Remote cloud access has been missing from most VMSes (including Exacq and Milestone). Now, Exacq, after releasing Cloud Drive Storage earlier in...
Briefcam Buys Frost Award* on Jun 20, 2019
Frost 'awards' are well-known and widely disrespected. Now Briefcam is touting their win. The way it has worked for many years is that Frost...

The world's leading video surveillance information source, IPVM provides the best reporting, testing and training for 10,000+ members globally. Dedicated to independent and objective information, we uniquely refuse any and all advertisements, sponsorship and consulting from manufacturers.

About | FAQ | Contact