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Why Juniper's Polycom Partnership Is Destined to Fail

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Juniper Networks (s jnpr) said today that it would team up with videoconferencing gear maker Polycom (s plcm) to form an alliance to deliver videoconferencing products that would ensure a quality experience. The products and services associated with this alliance will come out the middle of this year.

This is clearly a partnership made to ensure that Cisco‘s  (s csco) move into the enterprise video conferencing space doesn’t go unchallenged. Gear from this alliance will be designed for providers offering videoconferencing services. Also as part of the partnership, Juniper routers will detect a Polycom video link and allocate the optimal bandwidth for it in real time.

When Cisco said it would buy Tandberg, a Polycom rival, for $3 billion last year, we explained why it had reason to move deeper into the middle market for video conferencing. However, I’m not sure that Juniper and Polycom are an ideal match, mostly because tying the product to the networking gear is a strategy that ultimately follows along with Cisco’s aims. As a smaller rival to Cisco, Juniper can’t win by playing by the same rules as the larger company — it needs to break them.

Cisco is tying its networking expertise to servers, video conferencing gear, consumer equipment and whatever else it thinks it can get away with, because it can guarantee a better quality of service, but also because that gives Cisco the means to keep its margins up. Cisco, may call its servers open, but they are not commoditized the way other servers are because Cisco has integrated this networking component.

By adding in the network layer, Cisco hopes to keep its servers from becoming the commodity that Dell’s (s dell), HP’s (s hpq) and IBM’s (s ibm) are. The same goes with things like the Flip camera that Cisco acquired when it bought Pure Digital. Sure it wants to boost bandwidth consumption so it can sell more telco gear, but it also wants to build a high-margin ecosystem around the home tied to its gear, in the manner that Apple (s aapl) has. But creating this end-to-end ecosystem tying the network and the device together isn’t the only way to ensure quality (although it may be the easiest).

Taking this back to the Juniper-Polycom deal, it’s not enough for these guys to shout, “Me too!” and hope that they can win playing Cisco’s game. A far more disruptive decision would be to open up the standards and ecosystem for teleconferencing and make Cisco-Tandberg gear look costly and less relevant. Polycom already delivers a standards-based telepresence products that will work with other non-proprietary gear (Cisco’s Telepresence is proprietary). Of course, by opening up too much Polycom and Juniper are facing an innovator’s dilemma that will almost certainly commoditize their hardware sales. They may be damned if they do, damned if they don’t.

6 Responses to “Why Juniper's Polycom Partnership Is Destined to Fail”

  1. Chris – a.k.a. Tandberg (now Cisco) employee – Your suggestion that this creates a net neutrality issue shows you do not fully understand what this is about. This is about QoS for video traffic on a service provider’s converged network. This solution is standards based and will support other standard-based video/telepresence systems. In contrast, Tandberg is about to be digested by Cisco, which has a priorietary architecture and history of giving lip service to standards and delivering closed solutions. Cisco has been claiming thier telepresence solutions are interoperable since day one, but we all know that is not true, and it is not in their DNA to suddenly embrace standards and openess. Welcome to the evil empire Chris!

  2. Good post. FYI TANDBERG equipment is based on open standards and is interoperable. There are markets (like federal) that require interop, so Cisco can’t shut it down entirely to pursue the strategy you lay out above.

    Second point — seems like you’re suggesting above that Juniper routers will prioritize Polycom traffic. Does that create a net neutrality issue?

  3. I buy the idea of building a high-value ecosystem, which the Juniper-Polycom partnership does very little to address. But as for opening up their solutions, I’m not sure what else Polycom can do to create more open standards. They even have interoperability with Cisco Unified Communications Manager, among other products.

    But regardless of whether Polycom chooses to purposefully commoditize hardware sales or not, the videoconferencing market is slowly moving away from hardware and towards software and PC-based video. It will be interesting to see how both Polycom and TANDBERG/Cisco deal with this challenge as videoconferencing finally progresses into that early majority status that defines a maturing business market.