Cisco Systems is entering new territory with its planned $3.2 billion acquisition of WebEx Communications, with plans to deliver collaboration tools as an online service and possibly integrate the company's business-related offerings with consumer social networking technology.
The company that made its name selling routers and switches will start selling a subscription service when it completes the acquisition, expected by the end of its fiscal fourth quarter. The move is a natural for a company that is quickly becoming a software vendor, but it's a big change of direction for Cisco, according to analyst Zeus Kerravala of Yankee Group. Major traditional software companies such as Oracle already offer their products by subscription.
WebEx lets organizations share presentations, applications, and other data online in collaborative sessions without having to buy or build an infrastructure of their own for it. The company also offers a suite of productivity applications, including e-mail, a calendar and a spreadsheet, under the WebOffice umbrella.
Cisco isn't aiming for the desktop productivity application market against offerings such as Google Apps, but it is serious about competing with Microsoft and others in collaboration and communication, said Charles Giancarlo, chief development officer. Microsoft already offers the Microsoft Office Live Meeting hosted collaboration service. Cisco sells MeetingPlace, a premises-based collaboration system, but hasn't offered a hosted system to date. WebEx and MeetingPlace are complementary, Giancarlo said, adding that WebEx is stronger in application sharing and MeetingPlace in multiparty voice and video.
With its recent acquisitions of social networking companies Five Across and Utah Street Networks, Cisco aims to use the technology in products it will sell to enterprises and service providers rather than running an online destination such as Utah Street's Tribe.net. What it got from those small buyouts could help it take advantage of this one, too.
"The technology that creates social networking and the technology that enables collaboration are really two sides of the same coin," Giancarlo said. "A lot of the tools .... will at least be very similar, if not the same." Cisco's ability to use the same technologies for both is an advantage for the company, he added.
The WebEx acquisition also brings more capabilities that can be integrated into Cisco's Unified Communications portfolio, Giancarlo said. That lineup brings together voice, instant messaging and other forms of communication with real-time presence information. Giancarlo would not elaborate on how Cisco might integrate the WebEx technology into that space but said it was a natural fit.
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