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Summary:

Cisco Systems announced this morning that it is buying web conferencing company, WebEx for $3.2 billion – another sign of the router maker’s ongoing software makeover. For the price of two YouTubes, Cisco just bought a company that had sales of $380 million, and a net […]

webexlogo.pngCisco Systems announced this morning that it is buying web conferencing company, WebEx for $3.2 billion – another sign of the router maker’s ongoing software makeover. For the price of two YouTubes, Cisco just bought a company that had sales of $380 million, and a net income of around $47 million. The move, a smart one, is actually part of a bigger chess game the company is playing against Microsoft.

Microsoft with its communications efforts is increasingly competing with Cisco in the VoIP business. The two companies will continue to butt heads as the worlds of computing and communication collide and become COMMputing. Mark Jo Foley, in an excellent post outlines the growing importance of Sharepoint for Microsoft.

“SharePoint is the definitive OS or platform for the middle tier,” Ballmer explained. It is the “missing link” (my words, not his) between personal productivity and line-of-business applications

Bing! WebEx which started out as a simple web conferencing company has started to take on some of the qualities Microsoft’s Steve Ballmer (via Foley) outlines. Shared workspaces, email and even office type apps are part of WebEx’s extended offerings.

Here is what Cisco’s Chief Development Officer, Charlie Giancarlo has to say:

Web 2.0 is perhaps most evident in the consumer marketplace with social networking sites, mash-ups and video sharing services. This is the “play” part of Web 2.0. But this collaborative technology will make huge advances in the business effectiveness with online collaborative tools like WebEx’s. WebEx was one of the early leaders in this market and remains a leader 10 years later, making intercompany collaboration accessible and easy for their customers.

Bing! Bing!

WebEx has about two million customers, many in the small to medium sized businesses – an area of focus for Cisco in recent years. With the Linksys business unit’s special focus on SMB, this deal has very little downside, unless Cisco manages to mess things up.

  1. What Did Cisco’s $3.2 Billion for WebEx Buy?…

    Following the deal announced by Cisco for the Web conferencing service, here are the candidates: 1) A channel for its cool telepresence system, according to Sean Ness. 2) A pig in a poke, opines Mike Arrington and a number of……

  2. The collaborative business and service efforts are a large component of the future of Web 2.0 applications and is a big part of the business plans of many of the Web 2.0 companies. With the advent of commodity computer, particularly commodity computing cycles (a la Amazon Web Services like EC2/S3), the ability for smaller companies like 37signals to compete with Microsoft and Cisco in this sphere will only be enhanced. It will be interesting to see if the ROI on the $3.2B over the next couple of years is positive.

  3. well, 2 million paying users for 3.5 billion…I see the goal, its the limited user base, 2 million, that is a big question mark. The race to the bottom on voip will be interesting, and I would not bet agains yahoo, ms, skype, cisco, or any contender. In fact, I bet oracle is about to get into the picture. Why? Becase you are talking about the convergence of many techonlogies, not the least of which is the enterprise database as we know it. Skype is doing a good job of making its userid the single tying factor to voice and the potential for infinite services on top of its massive social/consumer/business network. With googol trying to pony up with at&t, I do not see them as having a clear focus…they are too busy creating too cool web 2.0 tools for free…”they can’t see the forest for the trees…we are quite smart emperor’s dressed in the best and brightest attire. Cisco is a carnivore, but so is ms, and oracle.

  4. Sorry, I forgot to mention, adobe is also vying for the voip space and p2p space and is no slouch in software, what they are missing is an enterprise database and customers who use
    it.

  5. Sorry, but I also like skypes “voip kernel” approach, embedding the skype kernel into handsets. They are becoming quite the innovator in that area and can drive voip on many many different devices. Not to mention their 3party app2app api which opens up the message channel for developers, this will take them very far if they do not eat their young.

  6. Pulse 2.0: Web 2.0 Reviews & Profiles » Blog Archive » This Week in Acquisitions: Microsoft and Cisco Systems Thursday, March 15, 2007

    [...] Communications, Inc. has a market cap of $2.82 billion and trades under the NASDAQ: WEBX symbol.  GigaOM has some further insight regarding why Cisco would actually buy the company.  In summary, Om Malik [...]

  7. Pulse 2.0: Web 2.0 Reviews & Profiles » Blog Archive » This Week in Acquisitions: Microsoft and Cisco Systems Thursday, March 15, 2007

    [...] Communications, Inc. has a market cap of $2.82 billion and trades under the NASDAQ: WEBX symbol.  GigaOM has some further insight regarding why Cisco would actually buy the company.  In summary, Om Malik [...]

  8. We’ve been using Adobe’s Connect product now for a few months and are finding it far superior to WebEx…I expect they will continue to gain market share against WebEx moving forward. In this light, the rich valuation seems unjustified.

  9. Silicon Valley Watcher–reporting on the business and culture of disruption Thursday, March 15, 2007

    3.15.07 Cisco buys WebEx…

    The purchase price is about $3.2 billion, according to the press release. WebEx is a market leader in on-demand collaboration applications, and its network-based solution for delivering business-to-business collaboration extends Cisco’s vision for Uni…

  10. Cisco’s earlier purchase of social networking assets from Tribe.net them the core SNS technology to make webex more sticky. One could imagine a potential consumer play (think of a realtime photo browsing experience between dispersed family members / friends, and many other scenarios) – i don’t know if that is their core demographic though.

    What makes this exciting is that they have purchased a ‘space’ where real ‘work’ happens – where people are spending real ‘time’ – they could allow social networking to grow from w/in this webex space. you can imagine many cool scenarios here…

    Gigaom may differ on this line of thinking: http://gigaom.com/2007/03/03/cisco-tribe-five-across/

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