Andrew Miller: Polycom will drive the next era of collaboration

In an exclusive interview, Polycom CEO Andrew Miller talks about the impact of mobility on the visual communications market and about Polycom's move to the cloud

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Miller: It's actually exceeded expectations. We did the deal for three reasons. One, we acquired the Halo business, which was 38 customers at 255 sites around the world, so we can now [market] Halo to Polycom's customer base. Two, we have an exclusive sell to HP and they are the largest computer company in the world to sell into for their usage. Third, probably as important is we have exclusivity for HP to only sell Polycom technology to their customer base through their channels. So Halo's 'sell to' and 'sell through' is a very important aspect for our company and we are actually ahead of schedule with each of those three components.

Gallant: Ahead of schedule meaning sales are exceeding your expectations?

Miller: We provided guidance that our sales are at expectations. We are ahead of schedule as it relates to our facilitation of HP's high touch [sales team] and channels in terms of their readiness to sell to the HP reseller and partner community.

Gallant: Did that Halo gear overlap with your high-end system? Has there been integration of those systems or will the Halo line eventually go away?

Miller: One of the most pleasing attributes of this transaction is that customers that were kind of bound to the Halo network are now able, through our technology, to be interoperable with Polycom technology. So we will continue with the Halo products and services but we will begin integrating Polycom technologies into those to provide a choice to customers of continuing with Halo platforms or integrating with Polycom platforms going forward.

Gallant: What's the fastest growing piece of your business?

Miller: It's interesting because a lot of people talked about the demise of the high-end, immersive rooms as the [market] becomes saturated. The reality is that is still a very accelerated growth market for us -- what we call "telepresence immersive." It's less than a 10 percent penetration rate, so there's quite a bit of run rate there. Both the room systems market, or what we call the group systems market, and PC personal devices, which is the desktop, are accelerating. We will grow this year between 20 percent and 23 percent percent year over year. Each one of those elements -- the immersive rooms, desktop and room systems -- are growing at a fairly analogous clip to that 23 percent.

But the fastest growth rate is our network infrastructure, called the Real Presence Platform. That is the brains that drives the immersive telepresence, the end points, the interoperability; it drives the connectedness, the high-end presence, voice and video.

Gallant: I wanted to discuss customer adoption factors. In the past, adoption of UC and collaboration tools was often driven by external factors; the economy is bad, the 9/11 tragedy, SARS or something like that. But is that changing? Are there other, broader factors that are driving uptake of these technologies?

Miller: Even two years ago, many companies were operating on ISDN, technology was standard definition [video} and there was very little interoperability of other technologies. If you fast-forward two years, now all of the technology is high definition. It runs over IP or even wireless 4G or LTE. From a technology perspective, it's TV-like quality and very versatile and that's been a major change. So our customers have moved away from just looking at this as [just] return-on-investment. Two years ago it was hotel rooms, how many airplanes, how many rental cars [can I save], put into a formula around return on investment.

Now with unfortunate incidents like Japan, with SARS, 9/11 or the Icelandic volcano, it's created a mentality of 'how do I conduct my business with committed business continuity using this type of technology?' It's around business continuity and it's around how I can be more productive. So we've moved away from ROI to a much more business continuity/productivity perspective. Technology has moved from dedicated rooms to mobility. Technology has moved from standard def to ISDN to IP-based. We really are at the tipping point of a visual society and we can feel that in our business today.

Gallant: What do you think it will take to get us to the point where people, say co-workers, doing their normal day-to-day activities start to use video as they might use the phone or email?

Miller: A couple of things. I think the Millennials and the next-generation workforce that grows up on Skype or FaceTime will require visual participation versus audio. I don't think a lot of twenty-five-year olds are going to be dealing with a lot of audio conferences going forward. The Millennials will be very visual in terms of their work/life balance. Also, there's ease of use -- the ability to utilize a smartphone or a mobile app or a social media application and with a single click be able to bring in another user. If you look at the work we're doing with Microsoft on the desktop, it's basically point and drag and an IM presence. So that exists today and I think that that will even get more refined. The ease of use is just as simple as making a mobile phone call. I think, finally, the cloud will enable customers that could never afford a premise-based application to use video-as-a-service with a price point that is extremely cost effective.

Gallant: Talk about the role of the Polycom Open Collaboration Network. What are the goals of that effort and what is the impact on the business?

Miller: We started the Polycom Open Collaboration Network with seven partners just under two years ago. It now represents 23 percent of Polycom's overall revenue. These are partnerships with companies such as IBM, Microsoft, Hewlett Packard, Juniper, BroadSoft, Avaya and Siemens, who all had one issue and one goal. The issue was that they didn't have a video collaboration engine inside of the company, so they partnered with Polycom. The other issue was that they were all competitors against Cisco Systems. So, fast-forward a year-and-a-half, [this represents] 23 percent of our business, key relationships with IBM, HP and Microsoft, to extend our reach globally. For example, Microsoft is 90 percent of the enterprise office market. It's a perfect opportunity for us to integrate and interoperate. Those partnerships are very, very valuable to Polycom today and going forward.

Gallant: Just so I understand, that 23 percent of revenue is revenue that comes to you through deals that are introduced by those companies?

Miller: Right. It comes in three flavors. One is direct revenue where they are actually procuring product from us. Secondly, it's what I call influence revenue, which is Microsoft will bring Polycom into an opportunity that we were not in before. That sale is a direct result of their influence. The third way is OEM, which is where we manufacture technologies that will then be sold by that partner.

Gallant: Can you talk more specifically about where you see the Microsoft partnership going? That's been an important one for you.

Miller: I've always stated that our relationship with Microsoft is unique. We license software to Microsoft for their high-definition desktop technology. We build specific technologies, our CX line of video and voice technology, for Microsoft. We have a very compelling joint to go-to-market program with Microsoft. Microsoft depends on Polycom for expertise in unified communications; we depend on Microsoft for the customer base and the extended reach. Partnerships have to have a two-way requirement and we have that with Microsoft and have seen great results. It's a huge competitive differentiator against our largest competitor.

Gallant: Could you explain your acquisition strategy? For example, you mentioned ViVu before. What is the role of acquisitions at Polycom?

Miller: Clearly, we acquire where we can buy versus build unique technologies and [speed] time to market. If you look at the last six months, we've acquired three companies, including the HP Visual Collaboration group. We've acquired Accordent Technologies, which is content stream and storage, very cloud based, and then ViVu, which will accelerate our social medical applications. HP is around market share and go-to-market strategy, ViVu is tuck-in technology to allow us to expand social media, and Accordent is an extension of our technologies to allow storage content and retrieval. They are, I would say, small to medium acquisitions that will allow us to not only enter markets but to have a competitive advantage from a time-to-market perspective.

Gallant: As CEO, what keeps you up at night? What worries you most?

Miller: I think what worries me most is just that when you are growing 23 percent year over year, it's all around scalability. It's about making the right decisions that you can actually execute on. In other words, there are so many opportunities - mobility, social media, collaboration and partnerships - it's about making the right choices around prioritization that fit into your business model and into your P&L. What keeps me and our leadership team up at night is just the relentless focus on prioritization and execution.

Gallant: You've got 30 seconds with a senior IT executive. What do you tell them about Polycom?

Miller: I tell them that we're a leader in unified communications, that we have a very differentiated, best-in-class approach in terms of how to increase productivity and drive business continuity, that this technology is a productivity tool that will not only yield results today but be a platform to grow all of the attributes of next-generation technology like mobility, like social media, with a partner you can trust for today and for tomorrow.

This article, "Andrew Miller: Polycom will drive the next era of collaboration," was originally published at Follow the latest developments in business technology news and get a digest of the key stories each day in the InfoWorld Daily newsletter. For the latest business technology news, follow InfoWorld on Twitter.

Copyright © 2011 IDG Communications, Inc.

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