Polycom CEO Andrew Miller: Can You See Me Now?
When Polycom brought in Andrew Miller in May of 2010, he wasted no time in starting to reorganize things. In order to stay up to speed in the quickly-changing video and video conference field, Miller knew that a slow transition wasn’t going to cut it. He changed almost half of the company’s employees and united two of the company’s divisions. As a result, revenue grew by 26 percent in 2010 alone and the company’s stock has doubled over the last year.
June 14 2011 by Jennifer Pellet
When Andrew Miller took the helm at Pleasanton, Calif.-based Polycom in May, 2010, the video and voice conferencing firm was at something of a crossroads. Cisco Systems had cannonballed into its market with the $3 billion acquisition of videoconferencing company Tandberg, Polycom’s biggest competitor, in 2009. Next, Logitech acquired $90 million LifeSize Communications, leaving Polycom the lone pure play in the videoconferencing industry—and raising speculation about how soon and by whom it would be acquired.
Instead, Polycom’s board brought in industry veteran Andrew Miller, who lost little time making big changes at the $1.2 billion company. Within five months of taking the CEO seat he replaced 47 percent of its sales force, changed out six top executives on its management team and took steps to unite the company’s voice and video divisions. While Miller acknowledges that the dramatic and speedy overhaul was disruptive, he saw no alternative. “When I came in on my first day, I looked around and said, ‘In order to do what the board wants, which is to regain leadership, this is not the team to get us there,’” recounts the 51-year old CEO, whose CV includes a 11- year stint at Cisco and three years as CEO of Tandberg. “It required a very different look and feel of talent.”
It also required an equally rapid ramp-up of the company’s technology. Once known as the maker of the ubiquitous triangular conference phone, Polycom is now a major player in the videoconferencing market, offering desktop and conference-room video systems, as well as the hardware and software that make them work. Currently, Polycom and Cisco dominate the videoconferencing systems sector, each with more than a 30 percent share of the market, which research company Gartner predicts will hit $5 billion by 2012. But in the battle for market share going forward, says Miller, much will hinge on each company’s success in migrating its technology to harness cloud capability and mobility, or the ability to participate in teleconferences through mobile devices like an iPad or tablet PC.
“Cloud is critically important,” says Miller. “Because going forward many customers will purchase this technology from a service provider like Verizon or AT&T through a service plan for a monthly fee rather than buy a premise-based system. And the ability to videoconference from a hotel room by opening your tablet computer or your iPad and clicking on Polycom opens up a whole new opportunity in the small to mid-sized business space. Those two markets alone are set to grow next year at 35 percent.”
Cisco and Polycom are the heavyweights in the video conferencing equipment business—where the upfront cost of installing a system averages around $250,000. But in gunning for share of the cloud and mobility videoconference marketplace—particularly small- to mid-size business customers—the two frontrunners will face competition from consumer-oriented offerings like Skype and Google Talk. Both services provide free teleconferencing, and Skype already offers group videoconferencing capability for just $8.99 a month. “It’s free, it works,” acknowledges Miller. “But it doesn’t interoperate with other systems. It doesn’t come with security or offer a high definition visual experience. So will that satisfy some small to medium size businesses? Sure. Is it enterprise resilient? No.”
Miller is betting that companies in sectors like education, healthcare and financial services, will need the kind of reliability and security that Polycom can offer—and that Google and Skype cannot. It’s a bet that Wall Street seems to be backing. Fueled by revenue growth of 26 percent in 2010, Polycom’s stock has doubled over the last year, an impressive feat in the face of monumental change.
Despite the formidable challenge of competing with Cisco in a shifting marketplace, Miller predicts that Polycom will continue its upward trajectory. “We made our numbers, changed out the sales force, added the executives and gained market share— essentially did three years of work in one year,” says Miller. “Now we’re moving from the frantic, reactive, ‘Oh my God, we have to do all this work,’ to confidence that it can be done.”