A look at Cisco’s purchase of WebEx

Cisco Systems Corp.’s recent US$3.2-billion purchase of networking software firm WebEx Communications Inc. is a signal that the networking giant is dipping its hands into the lucrative SMB market.

WebEx, which deploys Web conferencing and desktop sharing technologies for businesses in the SMB space, can be a gateway software for clients looking to eventually move into higher-end Cisco collaboration products, according to one analyst.

Cisco’s acquisition strategy has been aimed towards larger and more mature companies, and in line with the company’s program to develop its own conferencing tools, said Chris Silva, analyst at Forrester Research.  

“These programs are much higher end and complex than what WebEx brings to the table, but the WebEx acquisition fills a hole for Cisco in the lower-end. It’s probably something that will help Cisco,” he said.

One Cisco executive said the move to focus on SMB, especially due to do the cost-sensitive nature of the market, is crucial.

“WebEx is a recognized leader in both collaboration and SMB markets and these markets are two core growth areas for Cisco. With this acquisition Cisco was able to achieve two business goals at the same time,” said Charles Carmel, director of business development for Cisco.

 He added the WebEx purchase enables Cisco to bring its unified communications portfolio together with its new lower-end network collaboration software.

WebEx helps SMB customers have access to collaboration tools of large enterprises, without the infrastructure requirements and costs.

“These managers will be able to utilize the platform to scale and deliver content. Cisco’s view is that all forms of communications and collaboration will traverse the IP network. This philosophy is at the core of our strategy to use the network as a scalable platform,” Carmel said.

Another analyst believes Cisco’s WebEx buy will have far-reaching effects on the role of network managers in monitoring and using networked software platforms.

“You’re going to see more applications delivered through software as a service because of Cisco. They recognize the fact they’re in the software game, but if you’re going to be in on software, you have to sell it as a service,” said Zeus Kerravala, analyst with the Yankee Group.

“One of the big endgames here is integrating it into other technologies and applications. I think what this means is that the network manager has changed significantly from working just with the pipes to working with the business unit,” he said.

Silva thinks that blending Cisco’s core assets like unified communications with network collaboration will change how network managers view services on networks.

“I think a more active role for network managers will be taking place. It’s going to require more care and feeding. We’re looking to the vendors that provide UC tools that take into account — other than just data or health of the network — health of the services of the network,” he said.

Comment: cdnedit@itbusiness.ca

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Jim Love, Chief Content Officer, IT World Canada

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