friday, 17 april of 2020


Verizon buys video conferencing company BlueJeans: US

Verizon has acquired video conferencing company BlueJeans Network as it taps into booming demand for online meeting tools being used by millions more people as they work from home. 

California-based company BlueJeans has almost 15,000 business customers and competes with companies such as Cisco’s Webex and Microsoft’s Skype as well as newer rival Zoom, whose traffic over US networks has grown more than 700 per cent in recent weeks according to Nokia data. 

Verizon did not disclose the amount it had paid for BlueJeans but CNBC reported a figure of $400m had been agreed. Hans Vestberg, chief executive of the US telecoms group, told the broadcaster that it opened talks about acquiring BlueJeans a year ago but that the need for video conferencing tools had been "extenuated" by government restrictions on travel around the world to stem the spread of coronavirus. 

The deal is also driven by a belief that video will become a more important application in the 5G era. Mr Vestberg has long been an evangelist about the need to combine telecoms and video technology, having acquired Red Bee Media, a broadcast network technology that was once part of the BBC, when he ran Ericsson.

Mike Fasciani, a research director at Gartner, said the combination of Verizon and BlueJeans could be a "healthy marriage" as the video conferencing service can be plugged into the parent company’s large business customer base.

However, telecoms companies have traditionally struggled to integrate applications, which is why most choose to bundle products such as Webex and Skype. “History is littered with failed attempts,” Mr Fasciani said.

Skype was the posterchild of an earlier boom in video conferencing that was driven by consumer as well as business users. Ebay agreed to pay as much as $4.1bn for the company in 2005 but later described it as a strategic mistake. The ecommerce group sold its majority stake in Skype in 2009 before Microsoft swooped on the internet voice company two years later in a $8.5bn deal to boost its own communications products business. 

AT&T, Verizon’s largest rival in the US, also tried to crack the video conferencing market when it paid $121m for Israel’s Interwise in 2007 with the business later turned into a research hub for the telecoms company.

Mr Fasciani said Verizon may have timed its move into video applications well as the medium becomes essential for doing business during the Covid-19 era and beyond with companies looking for alternatives.

Zoom’s growth has been slowed after it apologised this month for making misleading statements about the strength of its encryption technology, which is intended to stop outside parties from seeing users’ data. It also admitted to "istakenly" routing user data through China over the past month to cope with a dramatic rise in traffic. Some organisations, including the US Senate, have now advised members not to use Zoom.

Verizon’s shares, which were up 0.2 per cent in afternoon trading to $57.04, have held up since the start of pandemic with the telecoms sector proving relatively resilient during the crisis. 

(Published by Financial Times, April 17, 2020)

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