Weekly Update

What does the Cisco/Jive partnership mean?

Earlier this month, Cisco announced that it was shutting down internal work management platform Webex Social, and at the same time announced a partnership with Jive. Let’s break this down.

First, Cisco has been getting nowhere with Webex Social. As I wrote back in November in Cisco sees a decline, and collaboration is flat:
Cisco 1st Quarter Revenue %

Digging into the enterprise software side of things, “collaboration” — which includes WebEx, Jabber, and the former Quad enterprise collaboration tool, now renamed WebEx Social — only grew 1% in the period, which is really flat, and is only 8% of the companies revenues.

I don’t think we can expect much innovation coming out of a “collaboration” product that is based firmly on the WebEx brand and now long-in-the-tooth notions of ‘enterprise collaboration’ based on video-conferencing rooms instead of lightweight, real-time chat that is cropping up everywhere (see Real time isn’t what it used to be: It’s really real time, now).

The Data Center line item grew 44% in the same period, which shows the direction the company’s revenue  is headed.

Cisco’s Quad — er, Webex Social — was actually a pretty good work management solution: activity streams, projects-based work interactions, tasks, files, etc. — but Cisco couldn’t sell it, or at least couldn’t grow it into being a serious competitor.

In December, Cisco bought Collaborate.com (see Cisco acquires Collaborate.com, but not a peep about Webex Social) without even mentioning Webex Social. It was clear that buying Collaborate.com was all about mobile, and tellingly, the announcement made about shutting down Webex Social made no mention of Collaborate.com.

Peter Ulander, VP of collaboration marketing at Cisco, wrote the company’s blog post on the news:

We’re also announcing the end-of-sale of WebEx Social today. As the market for enterprise social software continues to develop, we’re seeing the market consolidate around key vendors. To provide the best flexibility and outcomes for our customers, we’re expanding our focus to work with these vendors’ products and to provide native integration with products in our collaboration portfolio. Rather than emphasize social within one product, we’re making sure it’s an integral part of all our products.

And the Jive partnership? The two companies had already integrated the solutions for more than 60,000 users at Thomson Reuters, so that deal might have been the final nail in the coffin for Webex Social. And of course Jive — who has been struggling in recent quarters — wants to blow the trumpet about this deal as loudly as possible. The stock market has responded with a 10% jump since the announcement in early May.

So this is a strategic retreat from collaboration for Cisco, and otherwise they would have acquired the struggling Jive. Let’s face it: Cisco has its own problems. Cisco has laid off 12,300 over the last two years, and sales declined 5.7% in the last fiscal year. The CEO, John Chambers, is in the news today, urging President Obama to end the NSA’s widespread surveillance because of the erosion of trust and confidence in US technology — and Cisco — that it is causing. This included the mention of photos that circulated on the web of NSA agents opening Cisco component boxes, as reported by the Financial Times:

There have been allegations that the NSA has intercepted IT equipment in transit from manufacturers to customers to help monitor and gain information on surveillance targets.

Jive has momentarily slowed its stock’s precipitous nosedive with this news, perhaps, but not the structural problems at the firm (see Jive posts $146M in 2013 sales, with losses of $75M), and the firm is being shopped for a sale, but has gotten no bites (Jive is apparently up for sale, but no one seems interested).

So, in the final analysis, this is what the news means:

  • Cisco was getting nowhere with Webex Social, and decided to end its strategic push into collaboration. Going forward, Cisco will likely partner with a variety of firms, based on tactical reasons. This means that Collaborate.com is also a likely candidate for sunsetting, too.
  • Jive has tried to make this sound like a new dawn, but it’s not. Cisco is using the announcement to muffle the news about Webex Social, and to allow the company to say that collaboration is critical and important to Cisco, while the meaning of this is exactly the opposite.
  • Jive’s real situation is unchanged. Cisco is unlikely to do very much for Jive, aside from some low-hanging fruit. So, Jive is still on the verge of running out of cash, and options.