This past week saw another big acquisition within the online video space with the announcement that Polycom had acquired Accordent Technologies for approximately $50 million. Polycom is based in Pleasanton, California and is well known in the enterprise video industry as a leading provider of unified communications solutions in telepresence, videoconferencing, voice and streaming products. Accordent is based in El Segundo, California and is a company of 52 employees which grew to $9 million in revenues in 2010.
Unlike other major companies within the space that have been on buying sprees over the last few years, this was Polycom's first acquisition since 2007. As Polycom President and CEO Andy Miller noted in a letter to customers the synergy between the two companies is "a perfect fit with Polycom's market-leading Unified Communications (UC) solutions" and will complement Polycom's existing offerings in Telepresence, video and audio conferencing. He noted that within the UC spectrum it's been a challenge for many companies on how to capture, manage, and distribute internal events, training, and corporate communication.
Since 1999, Accordent has specialized in video capture, content management, and delivery solutions more than 1200 organizations in the enterprise, public and government sector, including 150 of Fortune 500 companies. Accordent's Media Management system was named "Best Enterprise Video Platform" by the readers of Streaming Media Magazine, one of the "Hot Online Video Companies to Watch in 2011" by Streaming Media EVP and industry analyst Dan Rayburn and Accordent was named "Best Online Video Company" by FierceOnlineVideo. Accordent's video content management and delivery solutions will now make it easier for Polycom customers easily to integrate meeting, training and event capture into existing and new deployments.
Dan Rayburn noted it's a nice payout for Accordent which was 5 times its revenue for 2010:
"For Polycom to pay 5x revenue in today's market is a clear sign of just how strategic Accordent's technology will be to the company and also an indication of how well Accordent was doing in the industry."On the Forrester blog, Henry Dewing called the acquisition, "A Marriage Of Real And Archived Video", and that the two companies share, "a common focus on unified communications and collaboration (UC&C), a tight relationship with Microsoft, and a deep understanding of the adoption of video in the market."
Steve Vonder Haar of Interactive Media Strategies commented that the deal "Marks Beginning of 'Business Video M&A Era'" and the term unified communications will become even more widely used as business customers seek one-stop shops for business communications.
Vonder Harr said:
"The deal allows Polycom to tell prospective customers a more comprehensive video communications story than ever before. With $1.2 billion in 2010 revenues, Polycom certainly is no business video shrimp. However, its successful product line was relatively one-dimensional, excelling at enabling live video communications in and between corporate conference rooms. he Accordent deal definitively and decisively helps Polycom build a bridge to other branches of the business video market space. Specifically, Accordent instantly makes Polycom relevant in providing platforms that manage on-demand content and make it possible to distribute content – both live and on-demand – to corporate desktops."According to data from market research firm Wainhouse Research, the acquisition expands Polycom's total available market by $500 million and, for this video management segment, this market is projected to generate a compounded annual growth rate of 32% through 2014 to $1.2 billion. Polycom's biggest competitor in the space is Cisco, which in October 2009 acquired Olso, Norway-based videoconferencing vendor Tandberg.
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I spoke with Mike Newman, co-founder and CEO of Accordent, the day after the acquisition announcement about the synergy between the companies and how Accordent will be integrated into Polycom.
The following is a transcript of our conversation.
Larry Kless: Congratulations on the big news!
Mike Newman: Yesterday was a lot of fun because we got to break the celebratory news to our respective teams. I think from what I've seen the news was very well received in the market and very well received by our customers. So I think yesterday was pretty much very productive, almost in an exclusively communications oriented way and today the rubber's hitting the road. Going out to customers and remembering there is an end of quarter that's approaching quickly.
LK: It's seems like a great fit and a lot of synergy between the two companies. How do you define that?
MN: It was extremely important to us to preserve the strategic value that we see ourselves providing in the marketplace, and I think in our conversations with Polycom from the outset, it was clear they are transforming; they're evolving; they're very aggressive about the unified communications space; they're capable of moving very quickly, and it was exciting to even think about what would be possible if we combined our offerings. I can tell you in every way possible, they have preserved everything good about Accordent. They've put us in a strategic role in the organization, everything from naming the division, "Video Content Management and Delivery", and recognizing that those are really key pillars in a strong unified communications strategy; and then really going to market with what really is an exceptional sales force and allowing our sales, our sales engineering implementations to really supplement and help them in a way that's very productive. So, like I said, today's business. Our sales teams are busy and it's fantastic to see.
LK: So how then does the acquisition change Accordent in terms of workforce, lock stock and barrel, and absorb all technology?
MN: We're really proud with the way that we've been respected through this process, as an organization that had very good chemistry; had a very good sense of the market and the market's requirements, and both executed in product development and sales very well. So, they've taken a hands off approach, in so far as saying, "We don't want to tinker with what is working", and really I have to say in a remarkable way welcomed us into their family with open arms. So again, preserving a role for every person on day one and preserving an important role. It was just fantastic for me to be able to stand in front of my company and say that, and know that – as had been demonstrated in every step of the process – that they valued us as an organization and what contribution we could make jointly going to market.
LK: From a market perspective, it was really refreshing to see this and not just another Cisco acquisition.
MN: I'll tell you and I think people often see the acquirer as having all the leverage, but this was a situation where we had choices. We were accessing the marketplace and as always, you can't pull it out of your DNA if you're committed to execution and we could not be happier. I just think the story is so strong and it's not a story that's just exclusively Polycom buying Accordent, it's a story about going to market as joint entity but also having the open armed approach to partnerships; to relationships with companies like Microsoft and Riverbed, and Bluecoat, very best-of-breed participants in this ecosystem. So it really wasn't just a product synergy, it was philosophical as well.
LK: It really has the makings of a powerhouse in the market with both companies being so strong in your respective spaces.
MN: This comes from neither company over thinking it. I think we were both listening to our customers and listening to what they were demanding and what their vision was for what a unified communications offering should be; and that made it pretty easy. At the end of the day, at least for us we looked at how that mapped to what customers were requesting and whether or not we'd be able to fulfill. Because you never want to go out to the market with any form of bad news and to enable our sales forces to avoid having to do that; to in fact go to market with great news and very focused news and being able to respond to the demands that they've been hearing is just a great feeling.
LK: Accordent's offerings seem to really complement Polycom's offerings in terms of meeting capture and content delivery. Was there any cross-over in the offerings or is this an entirely new division for Polycom?
MN: I learned a word in this process which I should have already known, but the word is rationalize. In Europe, they use the word "made redundant". Nothing had to be rationalized, there was zero overlap and in fact, it was quite remarkable as we mapped our respective products how easy it would be to start to integrate them because they literally were contiguous. They came right up to the edge of overlap but did not, and so what you have is a pretty thorough understanding of what should come next in the story and now we're able to provide it; and that's a reciprocal benefit. Because certainly, I was starting to envision probably 12 months ago that it was going to start to get dangerous to be a boutique unless you had very strong partnerships and/or were absorbed into something broader.
LK: Will the Accordent name and brand be completely absorbed by Polycom?
MN: Absolutely, we're aggressive about rebranding the products under the Polycom umbrella. We're aggressive about rebranding the company and we're a very tight knit group here and as much as we love being Accordent, we're already very very proud of being part of Polycom and that has almost everything to do with not just their achievements to date, but with the class with which they welcomed us into their family. The commitment is genuine, it's intense and literally in a matter of hours our people were at ease and focused on what they should be focused on, which is execution.
LK: How then will it look like for the business itself and how are the leadership roles blending?
MN: You'll start to infer a theme from my responses, and it's a really nice theme, and everything is staying intact. We keep our headquarters in El Segundo, California, in fact we're in the process of renewing the lease on it. Everyone is with the company and our roles are almost identical. I think we're going to obviously migrate over to Polycom's processes. So we'll have a greater deal of efficiencies there, because you know how it is essentially with a start-up where you cut corners. So, I think Mike's engineering operation (Mike Lorenz, Accordent's long-time CTO) is left completely intact and there's a great deal of deference to what they've been able to do; and I can tell you sales are in for the ride of their life. So they are ready and where I see demand coming from already is just remarkable. They just pounced on it and I'm so thankful we're not twiddling our thumbs getting our burdened with assimilation and we're figuring it out on good faith without missing a beat in the market.
LK: Where do you see this initial surge in demand coming from?
MN: I really believe time is of the essence. Now is the time along this paradigm of pent up demand that's being acted upon; demand that's already been executed against and being expanded. Large organizations, in particular regardless of the vertical, regardless of the geography are investing in unified communications. As you know from our traditional space in streaming, demand is just becoming rampant. So, I think we see it in all directions and it's really a process now of prioritizing; being organized and satisfying demand as quickly as possible. Certainly we have a sizable install based but it pales in comparison to to what we're already being exposed to with Polycom; and I do think in a very very short time we are going to be selling at full speed worldwide.
LK: What do you see as obstacles for growth of the unified communications market overall?
MN: This is a great thing for an entrepreneur to say, which is, the potential obstacles are in our control now. The market is maturing rapidly. I think even if the solutions were disconnected and there were loose partnerships; I think the demand is so strong that the investments are going to be made. They advantage we will have is that we will have a seamless story; we will have a single source for everything from the product suite to the support, to the services and so forth. So really, we see and we're thankful for this responsibility for just the burden of executing; and bringing not only the products to market but the messaging and the education; and doing that in a way where we can capture the demand that's out there.
So, I lived through 9 years of where we thought were were executing pretty darn good, but the market wasn't maturing; and you sit there going, "There's not that much you can do", you can't convince a multi-national corporation to do something they just don't want to do but now it's pull and we just have to make sure that we're navigating effectively to the right spots within organizations with the right solutions and the right messaging and i think we've given ourselves a great chance at doing that.
LK: It's great story too, with the acquisition price of $50 million for Accordent, but the opportunities that can come from the synergy between your two companies seems to the bigger story.
MN: I think the message it sends that is so positive I think for everybody involved is, this is strategic. The message it sends is that Polycom is absolutely committed to being the leader in this space and is willing to make the investments on behalf of its customers. I think for the players across the entire streaming landscape, obviously it doesn't relieve them of the burden of execution, but it reinforces that the reason they got into the space in the first place is valid. There is that market out there, there is that demand; no one's going to hand it to you on a silver platter but it's certainly worth getting out of bed for and trying to capture.
I'm so thrilled to not to really be bogged down with internally facing things. I've loved two parts of my job since inception; focusing on strategy and focusing on selling. They are not only freeing me up to focus on those two things, literally exclusively, but really the rest of the organization. As you know, there can be inefficiencies in start-ups and small companies and certainly imperfections in processes, and things that distract you from doing what you love to do and what you should be pretty good at doing. I will tell you, the greatest feeling I've had during this entire process is just being unencumbered and just really being able to focus on execution and that actually is going to magnify, as I get a better sense of the resources that are available to us and a way to leverage those resources. I think next week is going to be incredible and the week after that's going to be better.
- Polycom Announces Acquisition of Accordent Technologies - Company - Polycom
- Letter from Andy Miller
- Polycom Acquires Accordent Technologies For $50M, Company Gets Buyout Of 5x Revenue | The Business Of Online Video
- Polycom Acquires Accordent — A Marriage Of Real And Archived Video | Forrester Blogs
- Polycom Acquisition of Accordent Marks Beginning of 'Business Video M&A Era'
- Larry Kless' Weblog: Cisco to Acquire Tandberg for $3 Billion in a Bid to Own the Videoconferencing Space
- Larry Kless' Weblog: Online Video Platform Summit: Measuring Success
Polycom, Inc. (Nasdaq: PLCM) is a global leader in unified communications solutions with industry-leading telepresence, video, voice and infrastructure solutions built on open standards. Polycom powers smarter conversations, transforming lives and businesses worldwide. Please visit www.polycom.com for more information or connect with Polycom on Twitter, Facebook, and LinkedIn.
About Accordent Technologies, Inc.
ccordent Technologies provides Enterprise Video Management solutions that enable organizations to inform, train and engage audiences online. The Accordent Enterprise Video Management platform addresses the complete content lifecycle of all video assets regardless of source or format – from the point of Enterprise Video Capture, to viewer Portal Services, to administrative Video Content Management, to Rich Media Delivery and content expiration across disparate networks. Accordent is an award-winning company serving the Fortune 500 and leading educational, government and healthcare organizations. Learn more about Accordent at www.accordent.com and follow Accordent (Accordent_Tech) on Twitter.