Why Cisco Bought Mail Startup PostPath for $215M

In order to fight its ongoing battle against Microsoft and Google on the whole issue of “collaboration,” Cisco today added yet another weapon to its arsenal.

The San Jose, Calif.-based company said it’s buying PostPath, which will allow it to add email and calendaring features to its WebEx collaboration software, for a whopping $215 million. The acquisition shouldn’t come as a surprise: John Chambers, CEO of Cisco Systems, recently said: “We believe we are entering the next phase of the Internet as growth and productivity will center on collaboration enabled by networked Web 2.0 technologies.”

PostPath, a relatively unknown start-up based in Mountain View, Calif., makes a Linux-based e-mail system that includes an independent AJAX Web client and works well on mobile clients. OK, it’s nothing more than a Linux replacement for Microsoft Exchange, sort of like Zimbra, which got acquired by Yahoo last year for $350 million.

It came out in stealth in 2006 and has operated under the radar for a long time. It recently announced that it worked with Apple’s iPhone. It is not clear who funded the company or for how much. The board members include representatives of Worldview Technology Partners, Matrix Partners and JAFCO Ventures.

Despite this acquisition, in addition to $3.4 billion purchase of WebEx, Cisco is primarily a hardware company that makes a living selling switches and routers. Nevertheless the company has the sales force and the channels to dent Microsoft’s domination. Oh, this battle is more fun to watch than anything else out there.

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