Analysts: Cisco looks to fight Microsoft with WebEx purchase
Software as a service is Cisco's objective in the deal
Computerworld - Cisco Systems Inc.'s planned $3.2 billion purchase of WebEx, announced this morning, goes well beyond an effort to gain access to Web collaboration tools; it puts Cisco in a better position to fight Microsoft Corp. in the promising software-as-a-service (SaaS) market, analysts said today.
"This is as much about Cisco competing against Microsoft as it is about [buying] the collaboration technology," Zeus Kerravala, an analyst at Yankee Group Inc. in Boston, said in an interview. "It's a huge deal. Cisco has never had a hosted online delivery business before."
In fact, Cisco has been late to enter the arena, he added. Microsoft already has a collaboration tool, LiveMeeting.
David Willis, an analyst at Gartner Inc. in Stamford, Conn., concurred. "This is Cisco's Google move," Willis said. "You don't just spend $3.2 billion on Web conferencing. This purchase is really about software as a service and Cisco's end run around Microsoft."
As such, Cisco and Microsoft are combatants in a battle, Willis said. "Microsoft has been marketing aggressively against Cisco, and just announced the Tellme acquisition, which is about technology that is core to Cisco's space. Increasingly, these two guys are no longer friends."
Cisco's willingness to spend $3.2 billion shows it is open to buying fully formed companies that have large market share, not just companies in their early stages, Willis added. "They're talking bold steps."
Last year, Cisco purchased Scientific-Atlanta, a video integration and TV set-top box maker, for $7 billion, he noted.
The Cisco and WebEx deal today is expected to close in Cisco's fourth fiscal quarter. Charles Giancarlo, chief development officer at Cisco, said in a teleconference that his company sees the move as important for long-term growth.
"Cisco is continuing to invest in intelligent network technology and innovation and to use the network as a platform for the next-generation explosion in business and consumer applications," he said. Giancarlo also noted that WebEx has 2 million registered subscribers, and said that Cisco plans to preserve the WebEx subscription model, a key differentiator for WebEx.
Cisco is likely to integrate WebEx with its other communications offerings, such as Cisco Telepresence, said Chris Silva, an analyst at Forrester Research Inc. in Cambridge, Mass. "The acquisition is logical, as Cisco is attempting to broaden its portfolio of services and products which rely on the network, and positioning the network as a strategic asset, not merely a conduit for traffic."
A possible next step for Cisco is to "marry social networking technology with the WebEx platform to potentially create a new category of business communications," said Bill Lesieur, an analyst at Technology Business Research in Hampton, N.H. "In the end, Cisco needs to create platforms and hosted services that seamlessly cross the PC, mobile and IPTV environments."
Willis said one possible downside could result from the acquisition. "This purchase will cause some confusion with enterprise customers, since it means Cisco will have [several] different collaborative clients" such as Sametime -- an instant messaging and Web conferencing tool that Cisco is providing with IBM -- and MeetingPlace, Willis said.
WebEx had been making plans for providing its technology as a SaaS platform for small businesses. SaaS is going to be popular, since it is easily available via a Web browser, and users are not charged per client, but by usage, Willis said.
"It is software rental, where there's lower risk with less capital."
Read more about Networking in Computerworld's Networking Topic Center.
- Best iPhone, iPad Business Apps for 2014
- 14 Tech Conventions You Should Attend in 2014
- 10 Desktop Apps to Power Your Windows PC
- How to Add New Job Skills Without Going Back to School
- Slideshow: 7 security mistakes people make with their mobile device
- iOS vs. Android: Which is more secure?
- 11 sure signs you've been hacked
- What Datapipe customers need to know about the new PCI DSS 3.0 compliance standard This handy quick reference outlines what PCI DSS 3.0 is, who needs to be compliant and how Alert Logic solutions address the new...
- Defense Throughout the Vulnerability Life Cycle This whitepaper provides insight into how to leverage threat and log management technologies to protect your IT assets throughout their vulnerability life cycle.
- The Critical Role of Support in Your Enterprise Mobility Management Strategy Most business leaders underestimate the importance of tech support when they choose an EMM solution. Here's what to put on your checklist.
- Separating Work and Personal at the Platform Level: How BlackBerry Balance Works BlackBerry® Balance™ separates work from personal on the same mobile device, right at a platform level. Find out how it can work for...
- Live Webcast Best Practices for the Hyperconverged Enterprise Network To the Age of Constant Connectivity and Information overload
- Getting Ready for BlackBerry Enterprise Service 10.2 Find out how BlackBerry® Enterprise Service 10 helps organizations address the full spectrum of EMM challenges, while balancing the needs of both the...
- Containerization Options: How to Choose the Best DLP Solution for Your Organization This webcast outlines a framework for making the right choice when it comes to containerization approaches, along with the pros and cons of... All Networking White Papers | Webcasts