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Polycom seeks edge over rivals with new videoconferencing product

(Reuters) - Polycom, which competes with Cisco in videoconferencing, hopes to move ahead of the pack with its new cloud-based product in a market it says will be worth $12 billion by 2015.

Videoconferencing is on the brink of widespread adoption as technology moves from expensive and complex boardroom products to technology that allows video communication on desktops, smartphones and tablets, and vendors are scrambling for their piece of the pie.

"Video is becoming more and more mission-critical, but it has not been taken up massively because of interoperability issues and inconsistent user experiences," said Sudhakar Ramakrishna, president of Products and Services at Polycom.

Polycom said on Monday that its RealPresence CloudAXIS Suite addresses those problems because it will let customers add anyone on Skype, Facebook, Google Talk and other business video applications to their video conferences from a browser via a hyperlink.

The product will be available to service providers and large businesses by the end of the first quarter, but Polycom will be running limited trial runs in the current quarter, the company said.

Polycom has been at pains to fend off larger rival Cisco, which dominates the videoconferencing market with its Telepresence virtual conference rooms, and competitors that offer free technology such as Microsoft's Skype, Google and Apple's face time.

The success of the cloud-based product is vital to Polycom, which still generates most of its revenue from hardware-based systems as it shifts to a software-based model while rivals muscle in on its turf.

That transition is expected to impact earnings over the next 12 to 18 months, analysts have said.

At the same time, rivals such as privately held companies Blue Jeans Networks, Vidyo and Avaya as well as business software maker Citrix are making inroads with their own technologies.

However, Forrester Research analyst Philipp Karcher said Polycom's product was impressive even if it was not the game changer Polycom claimed it is.

"It is an evolution," Karcher said, adding that there was a lot of interest in browser-based video conferencing but that Cisco "is also moving very aggressively into the web browser paradigm with WebEx and WebEx."

Polycom's announcement may also be a preemptive move to make itself more independent of Microsoft, which is a key user of Polycom products in its Lync corporate video, email and messaging product.

It is still unclear how Microsoft will incorporate Skype, but Polycom has acknowledged in its annual report the risk that its products could be replaced by Skype.

Mizuho Securities analyst Joanna Makris has said an integration of Skype into Lync would mean "game over" for Polycom.

Polycom's Ramakrishna said the product announcement did not change the company's relationship with Microsoft, which was "a key strategic partner."

(Reporting By Nicola Leske; Editing By Ryan Woo)

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