Cisco Buys Tandberg, but does Video Interoperability Suffer?

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Cisco Buys Tandberg, but does Video Interoperability Suffer?

Cisco bought Tandberg, a video conferencing company for $3 billion. But is this good for the video conferencing industry or bad? Let's have a recap of Cisco's "openness" and adoption of standards.

First, Cisco was very late to adopt the SIP standard, finally embracing third-party SIP phones back in 2006. However, Cisco plays some serious licensing shenanigans that make it very cost prohibitive to use 3rd party SIP phones with Cisco CallManager. If you look at Cisco's CallManager licensing guidelines, a third-party SIP Device (Basic) that supports one line consumes three license units and a third-party SIP Device (Advanced) that support up to eight lines and video consumes six license units. As an example, for just a basic IP phone you must purchase (three) license units at $50/each for $150 total on top of the cost of the phone itself. However, an inexpensive  Grandstream GXP-2000 (a $85 phone) is classified as 'Advanced' since it supports multiple lines, thus requiring six license units for an additional $300, bringing the grand total of the handset to $385!

Further, Cisco has their own proprietary IOS, usually requiring certified Cisco personnel to manage. Although they have recently added web admin tools, to get to nitty gritty, you still need to know the command line commands.
So Cisco doesn't have a track record of supporting standards.

Now back to video. I recently scolded the single play VoIP providers for not offering interoperable video phones. Why can't a Packet8 videophone call a ACN videophone? I wrote:

If the single play providers were smart, they'd take my advice and make their videophones interoperate. Forget trying to hold your customers hostage by forcing them to stay with your service in order to keep their videophone capabilities. A customer that signs up with ACN and gets the videophone should not only be able to videocall Packet8 videphones, he should also be able to leave ACN, join Packet8's service and continue to use his videophone. With standards such as SIP, H.264, etc. there's absolutely no reason why videophone shouldn't interoperate. Further, with mobile phones increasingly adding more processing horsepower, and embedded cameras, making 2-way video calls from a Windows Mobile phone or Apple iPhone should be quite feasible. It's all about the standards, baby!

Which brings us back to the Cisco/Tandberg deal. I should mention that Tandberg and Cisco have a relationship going back to at least 2005, when Cisco OEM'ed the Cisco IP Phone 7985G Videophone from Tandberg. Tandberg reported revenue of $809 million in 2008 and sells various video-conferencing products, including high-end HD video systems that compete with Cisco. So it's a smart move by Cisco. But is it good for the enterprise business? I don't think so. My guess is that Cisco will do what they did with their native Skinny-protocol IP phones, which is if you want interoperability, you'll have to license the SIP protocol. I suspect something similar will happen to businesses that wish to deploy video telepresence solutions. You will either go 100% native Cisco/Tandberg for all your video endpoints, or you will pay through the nose to use a 3rd party video endpoint.

Rich Tehrani wrote something this morning along the same lines and he quotes Polycom. Rich wrote, "Companies like Polycom are not pleased with the situation. Stefan Karapetkov, Emerging Technologies Director for the company had this to say in his blog:"
Cisco announced today that they will acquire Tandberg, and this will have significant impact on the video communications market. It will reduce competition, and limit customers' choices, especially in the telepresence space. It will, hurt Radvision who now fills the gap in Cisco's video infrastructure portfolio.

I am however more concerned about the standards-compliance that have been the pillar of the video communication industry for years. Tandberg and Polycom worked together in international standardization bodies such as ITU-T and in industry consortiums such as IMTC to define standard mechanisms for video systems to communicate.

Cisco on the other hand is less interested in standards, and considers proprietary extensions as a way to gain competitive advantage. The concern of the video communication industry right now should be that the combined company will be so heavily dominated by Cisco that standards will become last priority, far after integrating Tandberg products with Cisco Call Manager and WebEx.

Telling is the fact that both Tandberg and Cisco declined participating in interoperability events over the last few months.

Not participating in interoperability events isn't necessarily the "smoking gun", especially with many companies cutting back on travel. However, it isn't a good sign. If indeed Cisco plans is to bring Tandberg's video solutions "into the fold" and make it unattractive to use with other 3rd party video solutions, then I for one will be rooting for those that adopt industry standards, including Polycom, HP, Grandstream, and others. I just hope other purchasing decision makers feel the same and force Cisco into adopting standards without extravagant licensing fees.

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Looking at the tea leaves, one can only hope that Cisco pays more attention to standards in the videoconferencing realm than they have in the VoIP world. Their phones remain barely SIP compatible and judging by Cisco's available talent pool to fix problems, it's no accident.

Interesting blog. I don't think the signs are good. A few months back I interviewed Cisco about interoperability in telepresence. Their answer: "We're less interested in standards than we are in innovation."

Good blog post touching on many important topics, especially about licensing strategy. I quibble with some of your points but this isn't the best place to go into lengthy discussion. I hope Cisco addresses some of your criticisms in the next days. I posted a link to your blog on my Facebook wall, trying to make this post go super viral.

My uncle has this Cisco IP 7985G Videophone. It works amazing. Its camera quality is wonderful. I am also thinking to buy this one for my new home. As I like this videophone. Thanks for sharing its nice information here. It will be very useful to me. It is nice to post here. I like this site.

Hii What an interesting blog !!I think too that Cisco is paying more attention to the videoconference segment than the VoIP.

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