Logitech Claims Microsoft Skype Acquisition Not A Dud Deal

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Logitech, is banking on the recent $8.5 Billion Microsoft acquisition of Skype to boost their videocommunications business despite analysts’ fears that Microsoft’s acquisition of Skype created further risks to it and other video technology providers.

Craig Malloy, co-founder and chief executive of Logitech’s LifeSize unit told Reuters: “It is a good thing. I do not see it negatively impacting our business at all. It has increased awareness and demand for videoconferencing”.

“Microsoft would have not paid $8.5 billion if they did not see a massive new market here. There is an enormous amount of growth left in this industry. There are many, many years of high growth left,” he said.

Logitech aquired Lifesize for $405 million in 2009 in an effort to expand their webcam and video conference capability.

Analysts say companies such as Logitech’s Lifesize were first in line to be hit if Microsoft succeeds in turning Skype more toward businesses, but Malloy said that was unlikely as Microsoft has its own strong enterprise videocommunications offering.

“Skype was moving into enterprise and was a bit of the wildcard. It is likely going to be the consumer videoconferencing business of Microsoft,” Malloy said.

The cheaper end of the $3 billion videoconferencing equipment market is already suffering from inroads that Skype and other video applications are making in the market, historically controlled by stand-alone conferencing devices in offices.

Malloy said the fast growth of desktop videoconferencing would not replace demand for dedicated equipment.

“A dedicated device will always do a better job,” he said.

Analysts say some replacement, especially in the lower end of dedicated videoconferencing equipment, will probably happen.

Last month research firm Ovum forecast the market for videoconferencing gear to grow an average 6 percent a year through 2016, with the take-up of desktop applications hitting sales of cheaper conferencing room equipment.

The growing market has spurred a wave of acquisitions in the sector, with Cisco splashing more than $3 billion on Norwegian firm Tandberg, and Polycom buying HP’s videoconferencing unit only this month.

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