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Avaya Rumoured To Be Moving In To Close Radvision Acquisition

Jeffrey Burt is a senior editor for eWEEK and contributor to TechWeekEurope

Networking vendor Avaya is close to buying Radvision, adding video collaboration to its UC offerings, according to reports

Avaya could be on the verge of adding video collaboration to its unified communications (UC) line-up, with reports circulating that the networking company is on the verge of completing a long-rumoured acquisition of Radvision.

According to a report in the Israeli business publication Globes, Avaya is about to put the final touches to a deal to buy Radvision for $230 million (£147m) to $240 million (£153m), a move that would give Avaya video collaboration technology and put them in competition with the likes of Cisco Systems, Polycom and Logitech’s LifeSize Communications business.

Growth market

The deal would also propel Avaya into a market that is seeing strong growth, with revenue in the video conferencing and telepresence space growing 20.5 percent in 2011 to $2.7 billion (£1.7bn), according to market research firm IDC. And that growth is accelerating, the analysts said, noting that between 2009 and 2010, revenue grew 16.6 percent.

“Growth has been spurred on by more well-defined video use cases among organisations across a range of vertical market segments, including health care, higher education, financial services, legal, law enforcement, manufacturing and retail,” Rich Costell, senior analyst for IDC’s Enterprise Communications Infrastructure unit, said in a statement on 28 February. “We also expect growth over the next several years to be bolstered by the impact of video integrated with vendors’ unified communications and collaboration portfolios, and increasing video usage among small workgroups, desktop users and mobile device users.”

Reports about a possible deal first arose in December. At the time, there was speculation that other vendors could jump into the bidding for Radvision, which makes video conferencing products for IP and 3G networks. Radvision has been struggling since one-time partner Cisco bought rival Tandberg for $3.3 billion (£2.1bn) in 2010. Tandberg gave Cisco much of what the partnership with Radvision had been supplying, including a greater presence in the midmarket telepresence space.

The Globes report said Radvision has been up for sale since the Cisco-Tandberg deal was announced.

Radvision’s fourth-quarter 2011 results illustrated the company’s struggles. During the three months in which rival Polycom saw revenues jump a record $407 million (£260m) – from $304 million (£194m) in the fourth quarter of 2010 – Radvision lost $4.4 million (£2.8) on revenues of $21.8 million (£13.9m), a drop from the $26.6 million (£17m) during the same period in 2010.

Revenues for Radvision’s Video Business Unit came in at $18.1 million (£11.6m) in the fourth quarter, compared with $22.6 million (£14.4) in 2010’s fourth quarter.

According to IDC, Cisco continues to lead the video conferencing and telepresence market, with a 54.3 percent share in the fourth quarter of 2011. The networking giant, which saw 35 percent revenue growth from 2010 to 2011, held 50.2 percent of the market in the fourth quarter of 2010.

Polycom saw revenue in 2011 grow 20.8 percent from 2010 to 2011.

“There is little doubt about the success video conferencing and telepresence have had over the past few years, fuelled by strong revenue and shipment growth rates and the increasing popularity of video among enterprises,” Petr Jirovsky, senior research analyst for IDC’s Worldwide Networking Trackers Research, said in a statement. “The enterprise videoconferencing and telepresence market will continue to be one of the fastest-growing networking markets for the foreseeable future.”