Blue Jeans Raises $50 Million

Blue Jeans Raises $50 Million

By Dave Michels September 19, 2013 4 Comments
Dave Michels
Blue Jeans Raises $50 Million by Dave Michels

Blue Jeans Network announced that it secured an additional $50 million in funding. The round was led by Battery Ventures, with participation from previous investors including Accel Partners, New Enterprise Associates and Norwest Ventures Partners. The round brings its total capital raised to nearly $100 million.

Congratulations to Blue Jeans, it’s impressive what they have accomplished.

What does this mean?

Here’s my interpretation of the news.

  • Blue Jeans has proved the value of seamless video conferencing interoperability. The major vendors insist there isn’t a problem. Not only is there a huge, painful problem; but a solution as well.

  • The funding shows that despite the UC space being dominated by huge vendors, innovation opportunities exist for smaller vendors – but it takes cash.

  • The deal also suggests increased confidence in cloud services over premises-based solutions such as MCUs.

  • Lastly, Blue Jeans is in it for the long haul and won’t likely be acquired.

Blue Jeans claims to have serviced more than 2,000 business customers which expands to over 3 million participants. The company expects to stream 100 million minutes of video conferencing this year. That reflects 4x growth over last year as it reported 24 million minutes in 2012.

Cloud services shine when it comes to interoperability. If two firms have video endpoints – then connecting them should be easy. Organizations that are still trying to sort out which brand who has or what codec to use aren’t using services like Blue Jeans. The major vendors feel the best solution to interoperability hassles is more like-branded equipment.

There’s a reasonable debate regarding cloud vs. premises when it comes to video infrastructure. But the cloud has two big (and growing) advantages on its side: mobility and interoperability.

A key benefit associated with corporate infrastructure is the reduction of WAN costs and capacity. That’s why organizations buy phone systems – because a separate analog line to every desk is cost-prohibitive. However, when all the participants of a conference are remote, then the opposite happens. Organizations need to have network capacity to bring all that traffic in (and out) of the private infrastructure.

Distributed teams are the new norm.

Mobility also drives cloud. There’s two ways to look at mobility: devices and locations. Most quickly associate mobility with devices such as smartphones and tablets. Location mobility refers broadly to remote users of all kinds. Mobility, as in outside of the office, is big and getting bigger. It could be home-based users, laptops in coffee shops, or even hotel guests. In both cases, form factors and networks become a bit of a wild card. Cloud services tend to serve the users with a good mix of services that maximize productivity. Remote workers need to communicate with colleagues – and that means voice, email, IM, specific apps, and yes video – seamlessly and painlessly.  

So that’s all great news. Blue Jeans has proven its model, and the forecast calls for more interoperability and more mobility. The perfect storm.

However, there is bad news too. WIth over $100 million now invested, Blue Jeans isn’t likely to get acquired. Perhaps that was the initial goal – world domination by organic growth. Or, perhaps that’s just what happened because there were no acquirers before the cash ran out. Regardless, it’s a long road ahead with few exits.

Big acquisitions do happen, but not nearly as frequently as smaller ones. They need to be fairly strategic, and usually profitable. This is not a unique problem (nor necessarily even a problem); firms like BroadSoft, Juniper, Extreme, and Vidyo have all been so successful that they also likely closed their “be acquired” door.

I would imagine that AGT, Yorktel, and especially Vidtel are quite pleased with the funding. Blue Jeans confirmed the cloud video model and became a far more expensive competitor for acquisition.

The big vendors aren’t on the bench. Cisco has integrated video into WebEx, LifeSize offers its Connections service, Vidyo has Vidyoway, and Polycom is seriously considering something. But so far, none of them have nailed cloud, interoperability, and simplicity in a single package.

 

4 Responses to "Blue Jeans Raises $50 Million" - Add Yours

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Art Rosenberg 9/19/2013 11:38:09 AM

Dave,

Yes, you are right about video in the cloud for servicing mobility. However, video is becoming important for consumers as well as employees, especially for verticals like health care and higher education. Health care, which will affec everyone and their health care providers, is rapidly moving towards minimizing the need for face -to-face scheduled officee visits by replacing them with video calls for a care provider to see the physical problem.

Legislation is also in the works for health care insurance providers to make payments without requiring face-to-face doctor visits. Finally, with mobile monitoring devices, health care providers can be automatically notified of a patient's physical problem (abnormal heart rate, etc.), and initiate appropriate follow-up interaction contacts accordingly (e.g., a video call to the patients smartphone). Hospital patients or housebound patients can exploit such monitoring, along with being on camera for doctor/nurse -patient interactions.

So, whatever benefits employees will get from video contacts, there's a lot more that all consumers/customers can get as well!
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Hyoun Park 9/19/2013 12:35:55 PM

I think the standalone part is especially interesting. It was easy to imagine that Blue Jeans would be sold to Cisco, but it's starting to look like both Blue Jeans and Vidyo are going to skip the acquisition step and perhaps take on the Big Guys head on. Once you start getting towards that billion dollar market cap, the number of buyers narrows significantly.

We analysts like to say "everything is moving to the cloud" but it's not always obvious what it means. Blue Jeans' progress is a much more concrete way to articulate that sentiment in the video world.
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Marty Hollander 9/19/2013 1:22:27 PM

Congratulations to Blue Jeans on a truly significant funding round. Your post seeks to explain why investors would fork over $50M for a service provider play, I think there is truth your premise, and perhaps more. Coming from a Vidyo perspective, though somewhat independent now, I have no inside knowledge of BJN. My hypothesis is that their investors are really investing in a collaboration play, not interoperability which is going to become a non-issue in a short time.

As Telepresence Options reported, BJN has seen a dramatic shift from Skype connections to their own browser-based client which one can assume will become WebRTC based over time eliminating the need for a download/plugin. This data reports that today 63% of participants connect from personal video endpoints (Browser, Skype, Lync, Google, mobile), 17% from audio devices only, and only 20% from legacy room systems using H.323 and SIP. We all know that the massive growth will be in the personal endpoint side. So the long term value will be in connecting people from whatever device they want to use, but over time, the legacy room systems will become a very small percentage of the overall participant base if BJN is going to grow at a rate to justify this new investment.

I project that BJN is building out an infrastructure to compete with Webex, and will add the collaboration feature set to their browser-based client to compete as a collaboration service provider. They are starting with a different philosophy where video is first priority, and use this to penetrate a customer base that has a need to solve the video communications challenge. From there, the users will choose to utilize the collaboration feature set, and over time BJN hopes that they will migrate away from the data collaboration centric solutions to theirs.

So they have a window during which video communications interoperability drives their differentiation and drives customer acquisition, yet they know that customer growth will be dr
Gravatar
Marty Hollander 9/19/2013 1:23:24 PM

(and to finish ;-)

yet they know that customer growth will be driven by personal endpoints and must hope to ride the next wave enabled by WebRTC.

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