Bloomberg News

LifeSize Takes on Cisco in Videoconferencing, Sees Sales Rise

August 30, 2011

Aug. 30 (Bloomberg) -- LifeSize Communications Inc., a unit of computer-mouse maker Logitech International SA, expects revenue to jump as it competes with rivals including Cisco Systems Inc. to add clients in the videoconference market, set to more than double in the next five years.

LifeSize’s sales are forecast to rise two to three times faster than the market, which is expected to grow 15 percent this year, Chief Executive Officer Craig Malloy said in a phone interview. Revenue at the Austin, Texas-based company rose 34 percent to $36.5 million in the fiscal first quarter, making LifeSize Logitech’s fastest-growing business.

“We’re seeing very, very rapid growth in videoconferencing,” the CEO said. “We’re going to piggyback on key trends and accelerate our growth.” LifeSize is targeting $1 billion in revenue in coming years, Malloy said, without giving a precise timeframe.

Technology companies are using mergers and acquisitions to grow in videoconferencing. Romanel-sur-Morges, Switzerland-based Logitech, the world’s biggest maker of mice, was among the first to make a deal in the industry when it bought LifeSize for $405 million in 2009. Cisco the same year announced it was buying Tandberg ASA, the world’s second-biggest maker of videoconferencing equipment, and Polycom Inc., the world’s largest standalone maker of videoconference gear, agreed to buy Hewlett-Packard Co.’s competing business in June.

Microsoft Corp., the world’s largest software maker, agreed this year to buy Skype Technologies SA, the world’s most popular Web-calling service, to strengthen its bid to convince corporate clients to replace traditional phone and videoconferencing systems with its software.

‘Beyond Consumer’

“Logitech wanted to diversify from PC peripherals,” Malloy said. “We’re a natural extension for them to go beyond consumer channels and into business ones.”

Global videoconferencing endpoint revenue, which includes equipment and doesn’t include services, will reach $4.15 billion in 2016 from $1.66 billion last year, according to research from Frost & Sullivan Inc.

“Companies are looking for ways to reduce costs due to the financial crisis,” Iwona Petruczynik, a Warsaw-based analyst at Frost & Sullivan, said in an interview. “People are moving away from in-person meetings to save money and time, and this is a great way to do it.”

LifeSize, the third-biggest videoconferencing provider with about 15,000 customers worldwide, offers high-definition video conferencing services, mainly targeting medium and large companies, the CEO said. LifeSize in July bought Mirial, a specialist in software for video-conferencing on tablets and mobile phones.

Android, Apple Devices

The Mirial deal allows LifeSize to “offer video communication to any Android or Apple-based device,” Malloy said, closing a gap in its product offering. “Mobility services are one of the key trends in the industry and they will help us gain market share.” He declined to say whether the company is looking at other acquisition targets and said LifeSize plans product innovations “the likes of which the video-communications industry has never seen.”

LifeSize is also adding cloud-based services such as virtual infrastructure for companies that don’t have in-house video expertise or information-technology resources, the CEO said.

--Editors: Jerrold Colten, Robert Valpuesta

To contact the reporters on this story: Chiara Remondini in Milan at cremondini@bloomberg.net

To contact the editors responsible for this story: Kenneth Wong at kwong11@bloomberg.net


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