LifeSize CEO Sees ‘Wonderful Opportunity’ For Video Channel Growth
Fresh off of a year of game-changing additions to its videoconferencing and infrastructure portfolios, LifeSize Communications now has an even bigger job: Taking market share from the titans of the video world, Cisco (NSDQ:CSCO) and Polycom, while ensuring its loyal solution provider partners that they’ll be able to continue to profit from LifeSize and have the sales and marketing air cover they need.
LifeSize is the video company best positioned for channel partners to follow-through on video’s promise, according to its new CEO, Colin Buechler.
“We believe we’re at a terrific junction in the growth of video communications,” Buechler said in a recent interview with CRN. “The industry has moved toward that vision of immersive communications. If there’s voice, there should be video, and in order to do that, you have to make it easy to use and cost effective to grow and scale.”
Buechler was named chief executive of LifeSize in January, succeeding LifeSize co-founder Craig Malloy, who’d headed the company for nine years. His appointment was one of several recent changes at LifeSize and its parent company Logitech, which ousted its former CEO, Gerald Quindlen, last summer following a series of disappointing earnings reports.
Buechler and Michael Helmbrecht, vice president of product marketing, said the technology moves LifeSize has made in the past two years have positioned it to tackle the widest range of customer video use cases, and also helped expand LifeSize beyond its roots as a provider of videoconferencing endpoints and infrastructure.
Those moves included the launch of LifeSize Connections, a cloud-based HD videoconferencing service aimed at customers craving HD video but not willing to invest in premise-based endpoints, and most recently, LifeSize Universal Video Collaboration (UVC), a video platform deployable either as a hardware appliance or as scalable software for use in a virtual machine.
[Related: Where’s the Puck Going In Enterprise Videoconferencing?]
LifeSize also increased its mobile footprint with the July 2011 acquisition of Milan-based Mirial, a specialist in mobile video. The mobile question will become increasingly more relevant — researcher Frost & Sullivan pegs the number of tablets in the enterprise as hitting nearly 50 million by 2015 — but it’s just one of several ways customers will want to use and manage videoconferencing, Buechler said.
“For the technology to go mainstream, you really need to solve the cost and complexity of growing customer networks,” Buechler told CRN. “We’re solving these problems in two different ways, whether customers want to grow and scale on-premise or if they want someone to manage it for them. For the foreseeable future, I think you’ll see both environments exist.”
It’s a great time to be in video, Buechler added, because of not only customer demand but also a comparative lack of companies that can get both the video technology and the video channel story right. LifeSize’s market positioning between the costly high-end video systems of Cisco and Polycom and the range of lower-end consumer and prosumer-centric video options is key to its appeal.
“[Video] went from a travel avoidance cost investment to a strategic business enabler — an internally-focused collaboration technology to, increasingly, connecting partners and customers,” Buechler said. “We see that demand continuing to increase, and what’s not necessarily happening quickly enough is the reduction in cost and complexity to build those video networks. So our partners have a wonderful opportunity.”
Randy Marcotte, co-founder and director of sales for Perfect Video Conferencing, a video reseller and managed services solution provider, said that LifeSize makes the most sense among enterprise videoconferencing players from a “price to performance metric.”
“I can go to large Polycom customers and say, look, why don’t you just give me a place at the table,” he said. “If it proves itself to you, you’re better off. If it doesn’t, at least we’ve done no harm and you go into your decision educated. It’s an easy discussion if we can get to the table because of price, but Cisco and Polycom can also do price modification. We win on the performance, because the technology just works.”
NEXT: LifeSize’s Evolving Channel Story
In its partners’ estimation, LifeSize was able to overcome initial concerns that, following Logitech’s $405 million acquisition of the company in November 2009, it would become either distracted or marginalized.
LifeSize in most cases has been able offer between 20 and 25 percent gross margin on video products while keeping price points agreeably lower than products from Cisco (NSDQ:CSCO) and Polycom. LifeSize endpoints typically run between $5,000 and $40,000. Video infrastructure offerings are also cost-conscious; the UVC, for example, starts at $3,999 before cameras and other equipment.
Its channel bona fides are solid. In 2010, the company completely overhauled its channel program to focus on three partner tiers: Expert, Professional and Registered. About 15 to 20 percent of LifeSize’s more than 1,700 partners are now in the Expert category, according to Sandra Hill, LifeSize’s director of channel programs, Americas.
While LifeSize has spent less time in the past year trying to recruit net-new partners, it’s now more focused on helping solution providers capitalize on its expanded technology portfolio, she said in a recent interview with CRN from LifeSize’s Austin, Texas headquarters.
Hill, who became LifeSize’s director of channel programs for the Americas in November, said that even with a slower partner recruitment pace, the number of inbound inquiries for solution providers looking to partner with LifeSize increased 10 percent from 2010 to 2011.
Any changes to the channel program — LifeSize, for example, is looking at ways to reward partners that sell its video products exclusively — will be incremental for the time being, she added.
“We’re not looking at any huge, over-arching, clean-sweep changes, but we’ll continue to do small tweaks,” Hill said. “I want the partners that we have to be healthy, and grow appropriately long with the video market.”
Solution providers like the idea of a LifeSize that wants to know its partners better and focus more acutely on areas such as co-marketing.
“They’re not really a high-touch company,” said
, CTO and COO of eTrica,LLC, a New York-based solution provider. “I’d like to see them more engaged and doing more marketing drive-through, because in my experience they’ve kind of sat there and waited for the marketing to come through for them. Video is not a good ‘hunting’ product. You either already want it or you need it.”
LifeSize needs to take a firmer lead in helping the channel get its message out,
“They’ll do things like telemarketing with us, for example, but if it’s been mined from our lists,” he said.
Mark Winner, vice president of sales at SMS proTech, a Sidney, Ohio-based solution provider, agreed LifeSize’s technology is a good option for a wide variety of potential video customers. But LifeSize needs to help partners better articulate a stance on how LifeSize’ breadth of products and services lines up with where the overall video market is going — as well as walk VARs through how LifeSize plans for its channel to be profitable.
“Could they be better? Yes, but i could say that about everybody in some way,” Winner said. “Resellers obviously don’t stay in business unless they can make money. We’re not purely a hardware business and not purely a services business. We’re looking for a clearly-defined ‘how am I going to make money’ selling these solutions that works for us.”
Winner said he’s found particular success with the software LifeSize brought to market following the Mirial acquisition. That product is now an enterprise-class client/server solution for desktop and mobile collaboration called LifeSize ClearSea that Winner said has been terrific for helping customers with Apple (NSDQ:AAPL) iOS products leverage video on mobile devices.
eTribeca.com’s Berzack also cited the strength of the portfolio.
“LifeSize will fit for any customer looking at videconferencing. Where LifeSize does well is in the midmarket,” he said. “I don’t think they’re priced flexibly enough but they do give Cisco/Tandberg and Polycom a good run for their money, particularly in education markets. They should be taken seriously.”
NEXT: LifeSize CEO On Logitech, Microsoft (NSDQ:MSFT)-Skype
Whatever the financial issues with Logitech, which in late January issued its fourth profit warning in 12 months, it’s clear LifeSize is growing.
According to Logitech’s most recent 10-Q filing, LifeSize sales for the three months ended Dec. 31, 2011 were $38 million, a 6 percent increase over the same period a year ago, and for the nine months ended Dec. 31 were about $111.9 million, an 18 percent increase from the roughly $94.5 million in that same period.
Logitech, by contrast, posted net sales of $1.8 billion for that nine-month period, slightly less than the year-ago nine month stretch, with retail sales down 1 percent and OEM sales down 19 percent. Logitech groups its revenue producers as retail, OEM and LifeSize, and in its 10-Q, noted on several occasions that LifeSize sales offset overall Logitech revenue declines.
Buechler and Helmbrecht declined to comment on Logitech’s performance, but maintained LifeSize is on a solid growth path.
“We’re happy to be a part of the family, and we’re an independent, but connected division of Logitech,” Buechler said. “We’re both very interested in driving broad-based enterprise video communication and making that more accessible to as many companies as possible. There are thousands of companies out there that haven’t taken advantage of what video can do.”
Interoperability with other vendors is also a priority, and Buechler and Helmbrecht said LifeSize will continue to work with both Microsoft (NSDQ:MSFT) and its Skype division. LifeSize integrated Skype video calling into its portable telepresence system, Passport, last year.
While some video vendors have come out against the Microsoft-Skype merger — notably Cisco, which is asking the European Commission to put conditions on the acquisition — Buechler said LifeSize stands to benefit because of those existing relationships.
“We’re excited about the combination of Microsoft and Skype,” Buechler said. “Skype is a wonderful vehicle for introducing many companies into the power of video communication that couldn’t historically afford it.