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Why are Cisco's TelePresence sales in decline?

It appears Cisco has missed the market transition in videoconferencing. How so? Well, it will be reporting FY12 TelePresence sales down in the teens.

Thu, 8/2/12 - 5:32am    View comments

Tandberg CiscoCisco has scheduled its Q4 and FY12 earnings announcement for Wednesday, August 15 at 4:30PM Eastern Time. Wall Street will be very keen to learn the fate of Cisco's TelePresence sales.

Why?

Because Cisco CEO John Chambers specifically stated during Cisco's Q3'FY12 earnings conference call:

"Our Q3 performance in collaboration being flat is not where we expect it to be. And as you would expect, we are putting an aggressive action plan in place with specific focus on our sales execution. Part of this challenge is market-driven and part of it is our need to execute more effectively."

Cisco's Sales
(in millions)
Q1'FY10 Q2'FY10 Q3'FY10 Q4'FY10 Q1'FY11 Q2'FY11 Q3'FY11 Q4'FY11 Q1'FY12 Q2'FY12 Q3'FY12
Collaboration 658 666 706 951 977 952 1,008 1,076 1,093 1,047 1,007

Chambers added:

"More specifically on collaboration. Increased sales of IP phones within our Unified Communication products were offset by sales decline in other products in the portfolio. Our TelePresence business, for example, has historically had tremendous success in the public sector and enterprise markets. As we saw continuous pressure in public sector and enterprise spending, we also saw the impact on our TelePresence results."

Video Conferencing Industry Revenue Growth Units - Y/Y%

For FY12, Cisco will be reporting TelePresence sales down in the teens!

So why are Cisco's TelePresence sales in decline?

Well yesterday, I had an intriguing phone conversation with the Strategic Account Manager of a distributor selling videoconferencing hardware that competes with both Cisco and Polycom.

And here's what I learned:

Cisco and Polycom are no longer the competition in videoconferencing, the competition are the innovative startups:

Polycom vs. Cisco Stock Price Chart

Polycom vs. Cisco Stock Price Chart

It appears Cisco has missed the market transition in videoconferencing.

Related stories:

Cisco's 2Q12 videoconferencing revenue dropped -23.7% year-over-year

Vidyo's claims of free, unlimited video calls could exacerbate industry issues

Videoconferencing and Telepresence Market Growth Decelerates

5 Reasons Cisco And Polycom Are In Trouble In Telepresence
 


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