Cisco Will Acquire WebEx

The acquisition, which is expected to close later this year, not only continues efforts by Cisco to position itself as something more than just a vendor of telephony and network infrastructure, but also places it in a better position to take on the likes of Microsoft in the unified communications arena. Microsoft is expected to gain ground in that area this summer when it releases its Office Communications Server 2007, complete with on-premises, server-based conferencing and telepresence functions.
WebEx’s service portfolio includes technologies and services that allow companies to engage in real-time and asynchronous conferences and to share documents and workspaces over the Internet. The service is available through an on-demand, subscription-based model in which companies buy conference time starting at 33 cents per minute for each user. WebEx services are currently used by more than 2.2 million people in 85 countries, and represent about two-thirds of the estimated $550 million total hosted collaboration services market.
Cisco already offers a lot of the same functionality through its own Meeting Place and other unified communications products, but those are geared more toward larger enterprises. WebEx’s customers fall largely within the small and medium business (SMB) space.
“As collaboration in the workplace becomes increasingly important, companies are looking for rich communications tools to help them work more effectively and efficiently,” Charles Giancarlo, chief development officer at Cisco, said during a conference call announcing the acquisition. “The combination of Cisco and WebEx will deliver compelling solutions accelerating this next wave of business communications.” The move, Giancarlo added, will provide Cisco “with a new and unique business model to expand its presence in the fast-growing SMB market.”
“Collaboration and unified communications are clearly a market in the early stages of evolution,” added Ned Hooper, vice president of business development at Cisco, but Cisco has identified them nonetheless “as key areas of growth, and this is a natural extension of that.”
“Cisco and WebEx share a vision of Web collaboration as a key to accelerating business processes and critical to durable competitive advantage,” said Subrah Iyar, CEO of WebEx. “Cisco’s global reach and customer focus will help us extend our core Web collaboration applications and continue to broaden the services we offer through the WebEx Connect platform.”
The WebEx acquisition is Cisco’s 25th in a little more than two years and its fifth-largest deal ever. — Leonard Klie