Polycom wants to eat, not be eaten

Andrew Miller, Polycom’s fairly new CEO, aimed to dispel any buyout rumors by going on record to say that the company is not in any talks with buyers. Instead, Miller sees Polycom being the buyer in the (near?) future:

Andrew Miller, who was named CEO last month, said the company was interested in buying companies with niche, cloud computing or mobile technology that would contribute to Polycom’s videoconferencing products.

“We’re going to become more active in M&A,” he said, adding that Polycom was in a strong financial position. The company ended last quarter with $470 million in cash and investments and no debt.

Interesting talk coming from a company with about $3 billion market capitalization while its biggest competitor, Cisco, commands 40x of that. Granted, Cisco has its hand in a lot of other sectors of the data networking business, but the fact that it doesn’t hesitate to buy out companies like WebEx and TANDBERG shows how serious it is in the video conferencing and telepresence space.

I’m not sure if it makes a lot of sense for Polycom to aggressively look for acquisitions. There’s no way it can out-buy Cisco. What Polycom needs to do is hit Cisco where it hurts: interoperability, mass adoption, and quick innovation.

Start partnering with other similar vendors to make each other’s solutions interoperable. In other words, be the most popular jock in the video crowd. Make Cisco jealous.

These partnerships should also encourage more adoption of Polycom and its partners’ products. It would be great if it can find a partner who’s already “voted most likely to disrupt telecom.” Hint: Skype.

And innovate, or find friends who are good at innovation. Have you heard of the new iPhone 4 and its FaceTime video call feature? I heard Apple’s looking to open it up to others to lure more people onto the bandwagon. Just sayin’.

Disclosure: I own Polycom stock in my retirement account.


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