HD Video Conferencing No Longer Dominated by Cisco (CSCO), Polycom (PLCM) -Morgan Keegan

June 9, 2011 10:09 AM EDT
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Cisco Systems (Nasdaq: CSCO) and Polycom (Nasdaq: PLCM) may be heading for some trouble.

According to Morgan Keegan, Cisco and Polycom may see stiff competition from relatively small Hackensack, NJ-based Vidyo in the high-definition video conferencing arena.

Vidyo has an encode/decode technology, called scalable video coding, which can produce a live feed on nine TV screens with 1080p resolution and 60 frames per second, Morgan Keegan's Simon Leopold said in a research note Thursday morning. (Read more about SVC here.)

The price for the technology? About $60,000. This seems steep until you realize Cisco and Polycom are selling similar offerings for $300,000 to $500,000. Further, Keegan notes Cisco and Polycom's products offer the 1080p resolution, but only at 30 fps.

The analyst contends: "We suspect Vidyo’s potential disruption to traditional players in this industry is in its patents surrounding SVC (8 granted, many more pending). If traditional vendors are not able to replicate the performance of Vidyo’s SVC without infringing their patents, then Vidyo could potentially extract license revenue from the other vendors, or could build a successful video conferencing product company by keeping the best performing SVC technology for Vidyo branded products."

Vidyo will also have a "sweet-spot" in desktop and mobile versions of the technology, where Vidyo is "superior to other vendors," Leopold said.

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