UC3 News — 27 September 2012

It has emerged that Huawei Technologies, maker of Chinese telecom equipment, could be issuing a challenge to telepresence vendors which would instigate a price war.

According to Bloomberg Businessweek, Huawei Enterprise unit’s general manager of telepresence equipment, Li Jun, announced plans that in three years his company will overtake Cisco. This would result in Huawei Enterprises becoming the dominating provider of telepresence and videoconferencing equipment.

Last year Huawei increased its sales to large businesses by 57 percent to $1.5 billion by selling video equipment and computer services. Huawei’s new plans to diversify its product range by offering new telepresence and videoconferencing technologies could result in it tripling its revenues from $32 billion last year to $100 billion by 2021.

Li stated that by pushing a first class videoconferencing product at only half the price of Cisco’s comparable system, a price war at the upper-end of the market will be instigated by Huawei. The looming threat of a price war will most certainly be damaging to other vendors such as Cisco, Polycom, Avaya/ Radvision and Logitech/ Lifesize, who will potentially suffer in an already dwindling market which has been seeing revenue declines. However, a price war will likely be welcome news for VARs and demand usually increases with price decreases.

According to Infonetics Research, the market research firm, the videoconferencing and telepresence market share of Cisco has sunk 5 points and its revenues declined 17 percent sequentially in the second quarter of 2012. This contrasts greatly when compared with the fourth quarter of 2011 when Cisco’s revenues increased 25 percent and its market share rose 3 points.

Cisco has a diversity of video endpoints from desktop units to three-screen immersive telepresence studios and its products focus on industrial design and user experience, according to Forrester’s report on room-based videoconferencing. What is also notable in Forrester’s report is that Huawei has developed a vast portfolio of video endpoints and infrastructure product, which includes five different series of immersive telepresence studios.

It appears that Huawei is well positioned to make an attack on the current market leader, Cisco, which will no doubt have spill-over effects with other vendors including Polycom, Logitech/ Lifesize and Avaya Radvision. (CY) Link

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