Can Plantronics Con­sum­mate Polycom?

The deal seems to be a win­ning propo­si­tion for Plantronics; whether it will end in a di­vorce only time can tell.

PCQuest - - CONTENTS - Ra­jneesh De | ra­jneeshd@cy­ber­me­

Mar­riages are made in heaven and of­ten in­creas­ingly in the board­rooms. And while mar­riages of equals have been the norm, there are in­creas­ingly dif­fer­en­ti­ated en­ti­ties com­ing to­day. There are of­ten in­stances in busi­ness his­tory when we wit­ness an en­tity punch­ing above its weight. While it would be a fal­lacy to call it the ‘tri­umph of the un­der­dog’, more ap­pro­pri­ately even a smaller com­pany ac­quir­ing a big­ger en­tity of­ten does make busi­ness sense. One re­cent case in hand is the news that Plantronics has reached a $2 bil­lion deal to ac­quire Polycom. The deal is re­ally trans­for­ma­tive as Polycom is ac­tu­ally big­ger than Plantronics. Let’s first look into the fi­nan­cial arith­metic of this ‘ap­par­ently David con­quer­ing Go­liath and hope­fully liv­ing hap­pily ever af­ter’ deal. The deal is com­prised of a com­bined $1.64 bil­lion cash com­po­nent and as­sump­tion of debt, while 6.35 mil­lion shares of Plantronics will be is­sued as well, be­ing val­ued at $362 mil­lion. This eq­uity stake gives in­vestors in Polycom a com­bined 16% eq­uity stake in the new com­pany. The deal of­fers a quick pay for Siris Cap­i­tal which paid $1.7 bil­lion for Polycom back in 2016. The goal be­hind the deal is essen­tially to of­fer cus­tomers bet­ter ways to col­lab­o­rate and com­mu­ni­cate with each other, mak­ing that ideas are seen and heard. Plantronics is tra­di­tion­ally strong in head­sets, soft­ware, sound­scap­ing and con­fer­ence, while Polycom is strong in con­fer­ence, desk­top, video and ser­vices; a suc­cess­ful con­sum­ma­tion of the mar­riage would make the com­bi­na­tion of­fer ser­vices across the spec­trum. Be­sides of­fer­ing greater ser­vices to cus­tomers, the fi­nan­cial ra­tio­nale is very im­por­tant as well, with syn­er­gies seen at a rate of $75 mil­lion per an­num, to be achieved within 12 months fol­low­ing clo­sure of the deal. Like any mar­riage this one too has been sol­em­nized with a view that it would yield a host of busi­ness ben­e­fits to the new en­tity. Plantronics can gain the fol­low­ing key ben­e­fits from the ac­qui­si­tion:

Ex­pand into the Open SIP Phone Realm

Polycom is a leader in the open SIP desk­top phone mar­ket, which con­tin­ues to show growth, in spite of the wide­spread move away from hard­ware to­ward soft­ware com­mu­ni­ca­tions and col­lab­o­ra­tion. Polycom has been ship­ping ap­prox­i­mately 2 to 2.5 mil­lion open SIP end­points ev­ery year for the last sev­eral years, with more than 60% of its ship­ment go­ing into hosted/cloud­based tele­phony en­vi­ron­ments. While Plantronics has been do­ing a great job in the UCaaS space with pro­fes­sional head­sets, Polycom’s broad and lead­ing port­fo­lio of open SIP desk­top phones def­i­nitely en­riches the Santa Cruz-based com­pany’s over­all value propo­si­tion, giv­ing cus­tomers the op­tion to choose the best de­vices -- desk­top phones and/or head­sets -- de­pend­ing on their end users’ needs.

Gain a Lead­er­ship Po­si­tion in the Au­dio Con­fer­ence End­points Mar­ket

Polycom is an in­no­va­tor and trail­blazer in the table­top au­dio con­fer­enc­ing end­points space and has en­trenched it­self as the undis­puted mar­ket-share leader. Mark­ing its 25th year an­niver­sary of pro­vid­ing con­fer­enc­ing and col­lab­o­ra­tion prod­ucts, the com­pany an­nounced Polycom RealPres­ence Trio in October 2015, trans­form­ing the iconic three-point “starfish” au­dio con­fer­enc­ing phone into a smart mod­u­lar col­lab­o­ra­tion hub.

Since its launch, Polycom RealPres­ence Trio has clearly set a new land­mark for the com­pany’s table­top au­dio con­fer­enc­ing end­points busi­ness. The de­vice not only ef­fec­tively ex­panded the com­pany’s tar­get mar­ket, but has also raised the bar for the com­pany’s en­tire prod­uct line. Plantronics is, thus, not only gain­ing the most pop­u­lar port­fo­lio of au­dio con­fer­enc­ing end­points in the world, but also re­ceiv­ing the new com­pany jewel, Trio -- the fastest-sell­ing con­fer­ence phone in Polycom his­tory. Let’s not for­get that Plantronics al­ready plays in the table­top au­dio con­fer­enc­ing end­points mar­ket with its Cal­isto se­ries of USB speak­ers. The Polycom ac­qui­si­tion

will cer­tainly pro­vide the com­pany with a huge in­stalled base to tar­get its USB con­nec­tiv­ity por­ta­ble se­ries.

Strengthen End­points Lead­er­ship in the Mi­crosoft Ecosys­tem

While Polycom has been the lead­ing IP desk­top phone brand de­ployed within the Mi­crosoft ecosys­tem, Plantronics has shipped ap­prox­i­mately 8 to 9 mil­lion head­set tops within the Mi­crosoft Lync/Skype for Busi­ness, and now Teams, en­vi­ron­ments. Plantronics’ ac­qui­si­tion of Polycom will cer­tainly grant the pro­fes­sional head­set leader a stronger over­all end­points po­si­tion within the Mi­crosoft ecosys­tem, with a wide ar­ray of Mi­crosoft-qual­i­fied and -cer­ti­fied end­points.

Gain a Com­pre­hen­sive Video Con­fer­enc­ing Tech Port­fo­lio

Polycom has a strong po­si­tion in the video con­fer­enc­ing end­points and in­fra­struc­ture mar­ket. Dur­ing the last sev­eral years, the com­pany has been con­sid­er­ably in­vig­o­rat­ing its video con­fer­enc­ing port­fo­lio, launch­ing new prod­ucts to im­prove the user ex­pe­ri­ence, strength­en­ing its ca­pa­bil­i­ties in video con­tent man­age­ment, and ex­pand­ing its ecosys­tem of part­ner­ships.

Fu­ture growth in the video con­fer­enc­ing realm will be driven by a stronger adop­tion of video in di­verse meet­ing en­vi­ron­ments, with rapid adop­tion com­ing from the next-gen­er­a­tion, low-priced de­vices used in hud­dle rooms and open meet­ing spa­ces. Glob­ally, there are 30 mil­lion hud­dle rooms and less than 5% of those are video-en­abled. Plantronics can def­i­nitely build on Polycom’s al­ready ro­bust video con­fer­enc­ing port­fo­lio and its mis­sion to en­able ubiq­ui­tous video com­mu­ni­ca­tions.

En­rich its Soft­ware-as-a-Ser­vice and Cloud Man­age­ment Port­fo­lioBoth Plantronics and Polycom have been con­sid­er­ably en­hanc­ing their soft­ware man­age­ment and mon­i­tor­ing ca­pa­bil­i­ties for busi­ness end­points. End­point de­ploy­ment, man­age­ment, and mon­i­tor­ing are be­com­ing key fac­tors in UC de­ploy­ments, es­pe­cially in cloud-based UCaaS en­vi­ron­ments. While Plantronics has al­ready made im­por­tant in­roads in this space with its Plantronics Man­ager Pro in­tel­li­gent soft­ware ser­vices, Polycom’s re­cent ac­qui­si­tion of Obi­hai’s cloud-based man­age­ment and pro­vi­sion­ing ser­vice can cer­tainly add new tech­no­log­i­cal el­e­ments to Plantronics’ mix, al- low­ing the ven­dor to ex­tend its mon­i­tor­ing and man­age­ment ca­pa­bil­i­ties to all types of busi­ness end­points, and mak­ing Plantronics the ven­dor of choice for new end­point ser­vices and so­lu­tions.

Strengthen its Chan­nel Part­ner­ships

While Plantronics al­ready pos­sesses more than 15,750 part­ners across the globe, Polycom brings more dis­trib­u­tors and re­sellers into the mix, ex­pand­ing Plantronics’ reach in­ter­na­tion­ally. Also, Polycom brings A/V con­trac­tors, so­lu­tion ad­vi­sors, and sys­tem in­te­gra­tors to the Plantronics’ ex­ist­ing part­ner mix, which is ideal for the ex­pan­sion of Plantronics’ Habi­tat Sound­scap­ing the com­pany’s in­tel­li­gent acous­tic man­age­ment ser­vice. Fi­nally, the pro­fes­sional head­set ven­dor will also ben­e­fit from Polycom’s strong presence in re­gions such as EMEA and APAC to bet­ter po­si­tion its prod­ucts against lo­cal lead­ing brands.

Grow its Pro­fes­sional Head­set Busi­ness

Plantronics can cer­tainly lever­age Polycom’s prom­i­nent in­stalled base of more than 400,000 com­pa­nies and in­sti­tu­tions to mar­ket its wide va­ri­ety of pro­fes­sional head­sets, in­clud­ing UC-en­abled head­sets, RJ9 head­sets, wire­less head­sets (in­clud­ing Blue­tooth and DECT), dual- and triple-con­nec­tiv­ity head­sets, and high-end noise-can­celling bin­au­ral stereo head­sets. For busi­nesses ready to move to a soft­ware-cen­tric en­vi­ron­ment without a desk­top phone, Plantronics will of­fer one of the largest prod­uct ranges of PC USB/UC-en­abled head­sets. For those that still pre­fer the desk­top phone, Plantronics will now have the solid brand of in­no­va­tive Polycom desk­tops, plus fully com­pat­i­ble RJ9 head­sets.

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