Logitech's LifeSize buy bewilders

Logitech's only video products are commodity Web cams, but that will change when the company closes a deal to buy high-definition videoconferencing vendor LifeSize Communications.

The acquisition, announced Tuesday, will put Logitech in competition with Cisco, HP, Polycom and Tandberg, among others — a high-powered group Logitech has never faced while selling its array of mice, keyboards, speakers, earphones, game controllers and other PC peripherals.

But if the purchase closes, it won't change the competitive landscape much, says Henry Dewing, an analyst with Forrester Research. Logitech plans to operate LifeSize as a separate business unit that will continue to compete against the same group of players.

LifeSize video gear ranges from a desktop video client that supports HD up to a three-screen telepresence system that approximates a live meeting with remote participants seeming to sit across a conference table. The company has a reseller deal with Siemens, which sells LifeSize gear as part of its OpenScape unified communications line.

Logitech says in a press release that it plans to pursue more such deals with other UC vendors.

Logitech's interest took industry observers by surprise. “It seems odd because Logitech is so consumer oriented,” Dewing says. “LifeSize has been more of a kit-focused videoconferencing vendor.”

The telepresence and HD video market has been in flux since Cisco announced its plan to buy Tandberg, which would broaden Cisco's offerings toward the low end of the line, but not so low as LifeSize, whose desktop client is compatible with third-party video cameras.

The Cisco-Tandberg deal is up in the air after Tandberg stockholders balked, hoping to increase the $3 billion offer. Cisco has given them until Nov. 18 to consider its offer.

The Cisco-Tandberg deal may have influenced LifeSize's decision to accept Logitech's offer of $405 million, Dewing says. That offer may have prompted Logitech to go after LifeSize at a price its investors could not ignore. The Wall Street Journal reports that the company is running on $80 million in venture funding, so the sale price is five times the investment.