LifeSize Sees An Opening In Cutthroat Video Channel

The video and unified communications spaces are more competitive than ever, but that hardly scares LifeSize Communications, which has stepped up its efforts to entice solution providers questioning how best to up their video practices in response to a growing market.

Ongoing concerns with Cisco's integration of Tandberg and Polycom's channel prowess have, according to LifeSize executives, created an opening for its lower-cost HD video endpoints and infrastructure offerings. And with a comparatively small channel, the company believes it can offer the most flexible products with the tastiest VAR margins, and not saturate its solution provider community, either.

Back in April, LifeSize quietly rolled out enhancements to its channel partner program that offered VARs greater incentives for selling LifeSize-led solutions. The company now boasts more than 1,500 channel partners in 80 countries, 370 of which were added in the last six months. It's continued to grow following last year's acquisition by Logitech. The company is increasingly seen as a strategic partner and, in some cases, an OEM product for vendors such as Avaya, and it's picked up accolades throughout 2010 including a "Growth Vendor Partner of the Year" award from distributor Tech Data.

Before, LifeSize had informal training for partners and basic certifications and partner rewards. As presently constituted, however, the LifeSize partner program offers three tiers: Expert, Professional and Registered. The higher up a partner goes, the more that partner receives in qualified lead distribution, inside sales support, MDF and co-marketing and lead generation programs, as well as incremental discounts for deal registration, larger discounts overall, and on-demand marketing and sales training via a partner portal.

All are of prime importance to partners, according to LifeSize, especially when partners can sell video systems priced well below many comparable products from Cisco and Polycom, and LifeSize can offer partners typically between 20 and 25 percent gross margin on video endpoints. While Cisco and Polycom have both begun to move downmarket with lower-priced endpoints, LifeSize maintains that it's far more affordable, with systems running between $5,000 and $40,000 for various levels of endpoint and telepresence equipment.

The channel program, according to the vendor, is part of what will push it to the next level.

"It's value-based, not revenue based," said Dan Sibille, director of Americas channels for the vendor, in a recent interview with CRN. "We're looking for partners willing to make the commitment in demo gear. In video, unlike in other IT segments, seeing is believing. We do look at revenue thresholds for each of the partner levels, but it is a multitiered program, and demo equipment and certifications are things that resonate very loudly with us. If the partners are doing the right things -- buying demo gear and engaging with us -- the revenues will come."

Video is past its tipping point in the channel, and no longer solely the province of audio/visual integrators or market specialists, he explained.

"Three years ago it would have been primarily A/V integrators of some flavor coming to us," Sibille said. "Now it's a nice blend of UC players, A/V integrators and more generic IT resellers. Maybe it's someone who has an established wireless or other networking practice, and saying, now I need to establish a video practice."

Next: "Recruitment Mode"

LifeSize is in recruitment mode, Sibille said, but now that it's amassed partners throughout the world and especially North America, it will be particularly discerning of who it adds next. While he declined to provide specific details on recruitment, Sibille said LifeSize has recruited a number of legacy Tandberg and Polycom VARs looking for other video options.

"I'm not in a position to share numbers of how many defections there have been, but there are partners that have added us where they may have had Polycom or Tandberg, and also partners that had elected to add us as a secondary choice before, and we've now become the primary video [vendor] for them," he said. "We look at and scrub every new partner that comes to our site, and we're looking to see whether they're the right composite, rather than just looking at a map and seeing we have x number of partners here and need more there."

Sibille said solution providers are right now eyeing the video and UC vendors that will drive their practices forward in the coming years, and first and foremost for those solution providers is who can make them profitable.

"In most cases, I think we're two times the average margins they might see from one of the other vendors," Sibille said. "A lot of them are also saying, 'I'm not getting the care and feeding maybe I did five years ago.' They want someone they can get behind and get entrenched with, and someone they can make a lot of money with without it costing them an arm and a leg to invest."

"LifeSize is so flexible, and it's all hi-def and it's priced right," said Mark Winner, vice president of sales at SMS proTech, a Sidney, Ohio-based solution provider. "It's easy to sell, and you can make some decent money doing it."

Winner said SMS proTech, also a Cisco Premier partner, has had great success with LifeSize in use cases such as county jail systems, where, for example, video arraignments and other forms of video and IP communication are a growing investment. The reality, however, is that state and local governments remain painfully cash-strapped, making LifeSize a lot more appealing than other, pricier video alternatives.

"For the market play, typically we'll run the numbers, run a couple of customer scenarios and see how they react," Winner said. "The customers that like it speak volumes about it."

Next: An Infrastructure Player?

Solution providers acknowledged that if LifeSize is to continue to grow, and also fend off software-based video upstarts like Vidyo, it will need to expand its purview beyond video endpoints. The recent debut of the $64,999 LifeSize Bridge 2200 -- the company's first-ever proprietary standalone video conferencing bridge -- is a good example, especially for how it moves LifeSize into the broader realm of infrastructure technologies.

"I'm not sure a lot of people realize what a big deal that thing is for LifeSize," said the vice president of a video and UC solution provider, who asked not to be named. "Their competitors like to paint them as endpoints-only: cute little video systems at a nice price, but not a bigger-league UC play. That's changing."

The solution provider agreed with other VARs who said there were concerns LifeSize's channel momentum would stall following its acquisition by Logitech, but that didn't seem to have happened.

"I think it took them a little while to cross all the t's and dot the i's," said the solution provider. "But Logitech hasn't been messing with LifeSize the way I think a lot of people thought they might. It was a good acquisition for them."

"This story's going to continue," LifeSize's Sibille added. "As we continue to bolster not only the endpoint story but also the infrastructure story, this will definitely continue. We get lots of great reception, and for the UC players, now the lights are going on and it's just opened up all kinds of opportunities for them to go in and talk to their customers.