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Edition: U.S. Article Comments (0) Follow Reuters Facebook Twitter RSS YouTube Read Exxon says oil barrel should be in $60-$70 range 11:43am EDT German court convicts then frees Nazi guard Demjanjuk | 4:21pm EDT U.S. attacks militants in Pakistan as pressure grows | 4:18pm EDT Penelope Cruz adds spice to enjoyable "Pirates 4" 11:28am EDT Senator describes "gruesome" bin Laden photos 11 May 2011 Discussed 148 Obama at U.S. base to pay tribute to bin Laden mission 114 Son says bin Laden sea burial demeans family: report 66 Pakistan threatens U.S. on cooperation if more raids Watched Deadly earthquake rocks Spain Wed, May 11 2011 Russia 'shot down Georgia' drone Mon, Apr 21 2008 Commodities sink as dollar rebounds 2:47am EDT Skype deal raises risks for videoconferencing firms Tweet Share this By Tarmo Virki, European Technology Correspondent HELSINKI (Reuters) - Microsoft's $8.5 billion acquisition of Skype is likely to boost videoconferencing from workers' desktops, posing further risks to video technology providers like Polycom and... Email Print Related News Microsoft to buy Skype for pricey $8.5 billion Tue, May 10 2011 Utilities advance market as leadership shifts Tue, May 10 2011 RIM launches new BlackBerry Bold smartphone Mon, May 2 2011 Microsoft stock tumbles after Windows sales dip Fri, Apr 29 2011 Microsoft Windows sales slip, shares drift lower Thu, Apr 28 2011 Analysis & Opinion The difference between public and private stock markets Microsoft and Cisco CEOs have much in common Related Topics Technology Home » Media » Stocks Microsoft Chief Executive Officer (CEO) Steve Ballmer (L) and Skype CEO Tony Bates shake hands at their joint news conference in San Francisco, May 10, 2011. Credit: Reuters/Susana Bates By Tarmo Virki, European Technology Correspondent HELSINKI | Thu May 12, 2011 4:22pm EDT HELSINKI (Reuters) - Microsoft's $8.5 billion acquisition of Skype is likely to boost videoconferencing from workers' desktops, posing further risks to video technology providers like Polycom and Logitech. The cheaper end of the $3 billion videoconferencing equipment market is already suffering from inroads that Skype and other video applications are making in the market, historically controlled by stand-alone conferencing devices in offices. The pressure on dedicated videoconferencing devices, excluding top-end telepresence rooms, will only increase, said Gartner analyst Jeffrey Mann. Dominic Dodd, analyst at Frost and Sullivan, agreed. "Some of the more narrowly focused companies will likely struggle," Dodd said. Analysts said companies like Polycom and Logitech were first in line to be hit if Microsoft succeeds in turning Skype more toward enterprises, while companies like Cisco and Hewlett-Packard, which have wider offerings and focus more on the fast-growing high-end of the market, would be little affected. "I think we're well positioned here, but if you haven't got good, big competitors and good start-ups, you're in the wrong market," Cisco Chief Executive John Chambers told analysts after the company reported quarterly earnings this week. The market for high-end offerings, such as telepresence rooms costing about $300,000 each, will grow 19 percent annually through 2015, according to research firm Ovum. BOOSTING USAGE Many smaller companies in the industry said Microsoft's massive bet on Skype would boost take-up of videoconferencing and create new opportunities for them. "Skype takes the scariness out of videoconferencing," said Ashish Gupta, marketing chief at venture-backed Vidyo, whose software platform is used by HP and Google among others. "It makes videoconferencing really obvious and part of everybody's life. As people use videoconferencing at home they are going to ask for it in the enterprises," Gupta said. Polycom Vice President Sue Hayden said Skype was a consumer offering that should not affect the enterprise market. "We don't see the Skype consumer play disrupting the enterprise performance," she said, adding the acquisition would not have an impact on Polycom's business with Microsoft. "We have a number of contractual arrangements with Microsoft that are fully in place, fully intact. This does not change that at all," Hayden said. Analysts at William Blair & Co -- which estimates Polycom derives some 5 percent of its revenue from Microsoft -- said the deal would not affect Polycom in the near future but there were longer term risks. "It could cap Polycom's growth potential within the Microsoft ecosystem, especially as Skype scales up to serve the enterprise market (though this will not happen overnight) and hardware devices are viewed as less important," analysts said. (Additional reporting by Sayantani Ghosh in Bangalore; Editing by Steve Orlofsky) Technology Home Media Tweet this Share this Link this Digg this Email Reprints We welcome comments that advance the story directly or with relevant tangential information. We try to block comments that use offensive language, all capital letters or appear to be spam, and we review comments frequently to ensure they meet our standards. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. Comments (0) Be the first to comment on reuters.com. Add yours using the box above. 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