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Summary

Headset developer Plantronics has announced plans to acquire Polycom, a leader in video-conferencing systems and corporate desk phones, for $2bn. The offer is nearly the same amount that Mitel had offered for Polycom in 2016. Plantronics’ proposed foray into video-conferencing systems promises to be advantageous for operators and other kinds of service providers partnered with Polycom that will benefit from a single source for voice and video endpoints sold with their hosted UC services.

One-stop shopping for headsets, IP phones, video equipment

The 2016 Mitel deal collapsed mainly because of various issues relating to Mitel’s profitability, stock valuation, and decrease in revenue at the time. Plantronics is slightly smaller than Mitel was in 2016, but it is profitable and has more working capital and better cash flow. As a result, the acquisition makes good financial sense for Polycom, and broadens Plantronics’ presence into markets (conferencing equipment and IP phones) where it does not currently compete.

Service providers that resell Polycom equipment and build hosted services on it have less to gain. The merger might however be an improvement on Polycom’s current position in a portfolio of companies managed by private equity firm Sirius Capital. Ownership by a technology firm with no portfolio overlap and a strong balance sheet might also give Polycom’s service provider partners continued confidence in their investments in various Polycom-based offerings.

A combined Plantronics-Polycom will also result in a stong endpoint portfolio that spans headsets (often essential for cloud-based UC and conferencing services), IP phones (popular with cloud-based UC services), and video conferencing equipment for offices, huddle rooms, and conference rooms.

Plantronics has no cloud services strategy of its own. This contrasts with Mitel, which is heavily invested in not only selling communications technology to service providers, but also establishing itself as an international provider of cloud-based UC services in its own right. Had Mitel’s acquisition of Polycom succeeded, service providers would have been likely to have faced competition from Mitel launching video-conferencing services of its own. They will face no such competition from the combined Polycom-Plantronics.

Appendix

Further reading

"Polycom returns with videoconferencing innovation, after acquisition by Siris Capital Group," TE0005-000991 (September 2017)

"Mitel's acquisition of Polycom strengthens its portfolio but complicates its partnerships", TE0005-000815 (April 2016)

On the Case: Solb Steel – Polycom and Microsoft, EI0016-000010 (January 2015)

Author

Brian Riggs, Principal Analyst, Enterprise Services

brian.riggs@ovum.com

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