Q&A: LifeSize's CEO on the Logitech Deal
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The videoconference industry got a jolt this week with the news that Silicon Valley mainstay Logitech was plunking down $405 million to buy upstart LifeSize, based in Austin, Texas.
It's not only geography that separates these two companies, they are also focused on two seemingly different markets: Logitech does PC peripherals and LifeSize is in the enterprise video conferencing business.
Craig Malloy, founder and CEO of LifeSize, admits he was a bit surprised when he heard of Logitech's interest, but in an interview with InternetNews.com he explains why he quickly warmed to the deal.
Q: When did you start talking to Logitech and how did the deal come together?
A: They approached us in May of this year through an investment banker and expressed interest. Our initial reaction was 'hmm Logitech, not a natural acquirer for an enterprise video conferencing company.' But the more we talked to them, the more we realized what they wanted to do really mirrored our strategy. Their strength in Webcams and video calling and the way they see communications going to a world of high def visual communications is the same as what we see, it's just that they're coming at it from the other end. That's how it started, we talked for months and that culminated in the deal we just announced.
Were there other suitors, were you looking to partner or merge with anyone else?
No. We were on a path to become a large standalone company with an IPO. But their [Logitech] interest was consistent and persistent.
LifeSize will continue to operate separately in Austin?
We'll operate independent but connected. We'll focus on our core enterprise high definition products. Logitech has some interesting communications technology with their Webcams and SightSpeed architecture that's going to help us work on some really compelling high-volume, low-cost products that can really open up the market in the next couple of years.
There is going to be a synergy then?
They are strong in the consumer market, where our strength is in the enterprise. I think we can meet in the middle and really open up the SMB market that is completely untapped and is going to be the major growth market over the next ten years.
We're already moving in that direction. Last week we released the LifeSize Passport with Skype which fits in the palm of your hand and sells for $2,500. That gives you an idea of what we're starting to do with technology that can go in any conference room just like the phone or used by a teleworker.
That is very different than the market Cisco's been going after.
The core tenants of Cisco's TelePresence they lifted from us. We're about telepresence for everybody. I don't disagree that the quality of the experience is what matters, but we want it to be for everyone. It's like the adoption curve for overhead projectors. They were $10,000 to $15,000, loud, and big, but over time you saw those prices and size come down till they came to a place where they could be a compelling value proposition. That's where we're headed.
Do you have an uphill battle winning over consumers who are so used to the very lifelike visual communication technology we've seen on Star Trek and other science fiction shows over the years?
Actually, we're getting pretty close. We do full HD video calls at 60 frames per second over the open Internet already.
What's the near-term plan once the deal with Logitech closes.
We're going to continue on our road map to be successful in the enterprise. We want to dig in together on the technology to drive mass volume. This is a different type of acquisition than it would be if we did this with an HP or a Dell in that it's not a huge channel synergy acquisition. This is more about what we're going to do longer term to make this technology available to everyone.
Logitech ships 160 million units a year of their products including mice, keyboards and Webcams and we'll be able to take advantage of that as well as their worldwide distribution as we move to lower costs and price points.
Cisco's acquisition of Tandberg has hit some snags. If it does go through is that a cause for concern?
It doesn't change our competitive position. Tandberg is already a safe choice in the enterprise; Cisco cements that but it also removes one competitor for us. It doesn't change what we're doing at all in terms of our strategy. It also opens up the anti-Cisco forces aligned against them (Tandberg) while Logitech is a neutral player.