Video conferencing capabilities are gaining attention for a couple of reasons. A growing number of small and medium businesses are using them to reduce their travel requirements and improve productivity. As a result, the market has been growing, and Polycom has been able to take advantage of that trend. For the nine months that ended on Sept. 30, net revenues were $806.3 million, compared from $666.6 million for the first nine months of 2007 and net income was $50.0 million compared to $40.1 million in the same period.
However, the high growth and increasing importance of video conferencing has attracted new competitors. Large vendors, such as Cisco and HP, have been pushing into this marketplace. In response, Polycom is trying to deliver high quality telepresence systems at a relatively low cost (about $17,000) and pushing its products through resellers, who often serve small and medium businesses. In the end, the competition will benefit these businesses because it will lower pricing and increasing functionality.