The acquisition of the Austin, Texas-based LifeSize will enable Logitech to expand its PC video business beyond the desktop with HD video conferencing. It will also allow Logitech, which has 8,000 employees worldwide, to tap into LifeSize's 9,000 video-conferencing customers spread across 80 countries.

"Logitech, the world leader in webcams and a pioneer in the development of PC-based video calling, is a natural fit for LifeSize -- from a business, innovation and cultural perspective," said LifeSize CEO Craig Malloy. "With Logitech's backing, LifeSize will be able to scale more effectively to deliver technology solutions to more customers and partners around the world."

LifeSize, which has 300 employees worldwide and $90 million in revenue expected this year, will continue to operate as a separate division with Malloy remaining as CEO and reporting to Logitech CEO Gerald Quindlen.

Market Potential

Logitech, considered a household name, provides consumers with computer peripherals, including webcams, keyboards and mice. The acquisition will allow Logitech to expand beyond the consumer market tapping into LifeSize's enterprise customers.

Joining forces with a company the size of Logitech with expected annual revenues of $2 billion will help LifeSize gain traction in a market that is expected to reach approximately $4.6 billion in the next five years, according to Wainhouse Research. For end-point systems in video conferencing, the market size in the third quarter was $385 million.

For the next two years, the deal will not affect any existing LifeSize partners or customers, change any products on the market, or result in any market disruptions, according to Andrew Davis, a partner at Wainhouse. It will, however, give LifeSize financial knowledge and access to additional operations experts.

"Perhaps more important, it will give LifeSize access to camera expertise," Davis said. "If anybody knows how to build an HD camera that sells for under $100, it is Logitech."

Long-Term Effects

One problem the acquisition doesn't solve for LifeSize is its dependency on Radvision for multipoint control systems and other elements of its enterprise solution, according to Davis.

Longer term, things are more interesting, Davis added. "Logitech is very strong with high-end consumers with a wide range of audio and video devices as well as home-automation product lines," he said. "Combine that marketing prowess, product development, and manufacturing skills with LifeSize's vision of low-cost HD video and we could be looking at videoconferencing systems in everyone's living room."

The acquisition is subject to antitrust approval and is slated to close in December.