It was only two months ago that an executive from RADVISION met with TMCnet to discuss the company’s 2011 achievements, predictions for the market in 2012, and what was to come for the video conferencing company. But, nowhere in this conversation was it mentioned that one of the industry’s biggest telecom equipment giants had its sights set on RADVISION’s products and services portfolio.

To our surprise, emerging from the rumor mill today is word that Avaya is reportedly set to buy the Israeli-based video conferencing and telepresence solutions provider for an estimated $200 to $250 million.

While the deal is yet to be confirmed by both companies, it’s one that would result from RADVISION being on the market for a good two years, ever since the company got dumped in 2009 by Cisco (News - Alert) Systems after it acquired Tandberg, RADVISION’s largest customer at the time, for $3.3 billion.

Attempts by TMCnet to contact Avaya and RADVISION separately resulted in both companies declining comment on the reports, telling us that “we do not comment on rumor/speculation.” As of early afternoon, David Dines, principal analyst at ACG Research, told TMCnet that he had no specific knowledge of the rumored acquisition and hadn’t spoken to anyone at RADVISION or Avaya. However, he indicated that the reported deal sounded like a reasonable move.

“At a first glance, it looks like it makes a lot of sense for both companies.  Avaya would benefit from a greater presence in the video conferencing/telepresence space,” Dines said in a previous TMCnet report on the rumors. “Plus they would get additional engineering resources.  It is pretty clear that RADVISION needs the deep pockets, and Avaya's brand and reach can only help with gaining market share.”

Finding a niche in the video conferencing space hasn’t been the only priority for Avaya, which is renowned for its unified communications products and voice install base. The company is also preparing for its IPO, and RADVISION’s expansive portfolio may be the answer to winning over investors and having the chance to participate in a fast-growing market.

“Unlike before, I think video is sustainable primarily because of this socialized, consumerized world we live in now and where a visual medium has become more acceptable even for businesses,” Zeus Kerravala, founder and principal analyst with ZK Research and former Yankee Group (News - Alert) analyst, told TMCnet today. “For Avaya, it lets them participate directly in the growth that video has seen. Having a good solid product roadmap, getting ready to IPO, I think is an important thing.:

Kerravala also indicated that the deal may be another strategy by Avaya to revitalize its data networking portfolio, a feature-set it has not tackled for a long time. By tying more things, like video conferencing solutions, to its network, so it can go more “toe-to-toe” with its competition, like Cisco, for that end-to-end sale.

“Avaya has been dancing around the video market for a long time,” Kerravala added, referencing the company’s partnership with LifeSize Communications. “But that’s not a video strategy, it’s more a video stop-gap. Acquiring RADVISION, whom I think has a very good set of products, is that next step they need to actually participate more fully in the video market. If you can marry RADVISION’s quality products with Avaya’s brand and their ability to market, then I think that that combination of 1+1 will equal 3,” he continued.

So, what will the purchase mean for the overall video conferencing market, where hot-shot vendors Polycom (News - Alert) and Cisco continue to dominate? “This adds another vendor – the video conferencing market right now is the ‘big two’ with a lot of little guys, but maybe Avaya can make it a ‘big three,’” Kerravala said, noting that the new Avaya-RADVISION deal will certainly increase competition between Avaya and Polycom and will potentially “put to bed” their current partnership.

What could be the only downside to the acquisition would be the potential culture clash resulting from acquiring a foreign engineering-heavy company like RADVISION, said Kerravala. However, seeing as Avaya’s previous purchase of Nortel – another engineering-focused company – was a seamless one, the integration will only be “something to watch.”

Another interesting element to add to the fire is Avaya’s long-standing relationship with HP, which simultaneously has a video partnership with Polycom. It may be a case that Avaya gains a partner but loses HP as an innovation partner on the UC side, Kerravala indicated.

Recent studies show it’s pretty clear the market may just add the fuel Avaya needs for its new endeavor. In fact, the video conferencing and telepresence market is expected to skyrocket over the next five years, and jumped 15 percent to $882 million in the third and fourth quarters of 2011 alone – a milestone record for quarterly revenue.

"Sales of telepresence and videoconferencing equipment surged in the past two years, with growth accelerating in 2011 as video took off on enterprise IP PBX systems. The video conferencing market is being fueled by a confluence of factors, including the proliferation of video-capable equipment, demographic and communication trends that favor video, industry use cases like tele-learning and tele-medicine, and most importantly, customer demand," said Matthias Machowinski, directing analyst for enterprise networks and video at Infonetics Research (News - Alert), in a press release.

Meanwhile, dedicated multi-purpose room video systems encompassed over half of the enterprise video conferencing market last year and are projected to be the biggest revenue-producer among enterprise video solutions – a niche RADVISION has made its bread and butter. In its January discussion with TMCnet, RADVISION’s Vice President of Corporate Marketing Bob Romano (News - Alert), shared insights into the company’s recent product portfolio expansion, which included the release of a full line of video conferencing clients including desktop, room and immersive telepresence systems, as well as a milestone launch of a standards-based enterprise-grade HD video conferencing application for mobile devices, called SCOPIA Mobile v3 – products that Avaya will soon get its hands on, if all goes as planned.

“I think it’s about time. The rumors have been out there for a long time,” said Kerravala.

Stay tuned to TMCnet as this story develops.