Cisco: Customers drove us to block Microsoft/Skype

Cisco’s appeal of the European Commission’s approval of the US$8.5 billion Microsoft/Skype union is customer driven, Cisco CEO John Chambers said this week.

Addressing a small group of reporters via TelePresence at Cisco facilities around North America, Chambers said customer desire for interoperability forced Cisco to appeal the EC ruling. Cisco issued its appeal last week, citing interoperability concerns between Microsoft/Skype and its own video offerings as well as those from other vendors.

Cisco and Microsoft are fierce competitors in unified communications and collaboration, and the prospect of Microsoft adding Skype and its user base to the Microsoft Lync collaboration platform has Cisco scrambling to slow the deal and seek concessions.

“We have a tremendous amount of respect for Microsoft,” Chambers said. “We are going to compete aggressively in collaboration, and partner in data center. Customers expect us to interoperate and work together. Microsoft does not see that as importantly as I do. But it’s what we are hearing from customers. They don’t only want you to interoperate but expect you to.”

Cisco had to release its own TelePresence Interoperability Protocol (TIP) as a condition for closing on its multibillion dollar acquisition of Tandberg, which made Cisco the market leader in videoconferencing. Many in the industry believe Cisco is looking for Microsoft to do the same before it can proceed with Skype integration.

“We have always gone with open standards, it’s the right thing to do on the video side,” Chambers said.

Chambers says the new trend of employees bringing their own devices (BYOD) into the workplace to access corporate data and applications makes interoperability critical.

“With BYOD … interoperability is at the forefront more now than ever,” he says. “Microsoft thought interoperability was very important with TelePresence and Tandberg. I think it’s in Microsoft’s interest to interoperate in the long run. Each of us, if we miss market transitions, it will cost us over time. Service providers don’t want this (incompatibility) either. They want any device to access any content. Is this really an important trend? I think it is. If you make the pie bigger, I’ll take smaller slice but I’ll increase my profits.”

Cisco was rumored to be eyeing its own purchase of Skype last year before the Web video company went public. Chambers confirmed that Cisco did take a look at Skype but the company could not see a fit for its customers.

“We had a chance to make that acquisition a very long time ago,” he said. “But it would be difficult for our service provider customers to benefit from. (Forgoing the acquisition) was the right decision then and the right one now. We bet on video six years ago. It’ll be the next form of communications and IT. We’re believing service providers will be a key differentiation.”

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