I've been talking to media and vendors today and here's what I'm saying (also posted similar comments to TechCrunch where Michael Arrington commented on the deal. There are multiple facets to this deal:
- First, some history, many of the comments regarding WebEx and web conferencing are not the primary reason to do this deal. As I have told financial analysts for years while at Meta Group, the crown jewel of WebEx is the Media Tone Network. That distributed, P2P network architecture now belongs to Cisco who can either advance it, or use parts of it for its own application networking purposes. WebEx has data centers world-wide as well as research centers in China, etc.
- WebEx was bright enough to see the writing on the web conferencing wall some time ago, the market is incredibly crowded, with over 80 vendors last time I counted. The market has tremendous downward pricing pressures. It is a difficult technology domain to grow a business.
- WebEx acquired Intranets.com a while ago. WebEx WebOffice and its recent WebEx Connect efforts had diversified WebEx from being so reliant on web conferencing (e.g., adding modules for customer support, sales, training in order to charge more). The move provided WebEx with a credible SaaS collaboration platform for the SMB market (further enhanced with its WebEx AIM Pro).
- The deal is a chess move vs. Microsoft re: Live Meeting. Microsoft has not over-taken WebEx in this space so now Cisco has another point of competition with Microsoft and one where it has an edge, at least right now.
- The deal gives Cisco an option to sell hosted web conferencing into the SBM space as well as large organizations. It gets confusing, since that move would compete to some extent with its MeetingExpress platform (where Cisco is now using Adobe's Flash-based conferencing technology). But, it's "reasonable" as long as there is some type of roadmap over time.
- WebOffice is the most intriguing aspect of the deal. The media has set WebEx against Salesforce from time to time. WebEx is trying to build out a partner ecosystem. Cisco can help with that. The WebOffice / Connect platform also provides some rationalization for the series of social networking moves that Cisco has undertaken recently (e.g., Five Across). The social networking technologies that it recently acquired could also be used to further enhance what is offered by WebEx WebOffice and Connect. Cisco can also now offer VoIP/IP Telephony services to all WebOffice users as a future deliverable - a pretty good deal for the SMB space.
- The deal puts an interesting twist on the recent IBM partnership. Cisco clearly wants to be in charge of its own destiny when it comes to unified communications. There will be the expected "things are fine - they really are" by management on both sides, but this clearly complicates things for customers and the sales force trying to argue one over the other. Cisco is not going to follow in IBM's shadow in the UC2 arrangement. Cisco will play these cards shrewdly - the Lotus Expeditor client is a sound platform to target and the rest of the IBM deal remains attractive with much potential - Cisco is simply not dependent on that path in terms of being an IBM "add-on". (Note: Clearly, this was part of the reason the agreement was downplayed last week at VoiceCon during the Cisco keynote.)
- Adobe must be feeling quite confused. In ... out ... on-premise/SBM only ...
- The deal is another commentary on the older Latitude platform as well. Adobe, IBM and now WebEx -- so many options, why should customers expect any future technology evolution from that existing platform.
So what's not to like...
- Cisco lacks experience in the SaaS space of a hosted collaboration platform. There's no guarantee that it will do a better job than WebEx at building out an extensible SaaS-oriented collaboration platform
- Cisco lacks experience in the application and collaboration space in general. WebOffice includes integration with Microsoft's productivity tools. Cisco is now
ta hosted e-mail provider.
- Cisco has not proven it can capture the "hearts and minds" of the developer community (when compared to IBM or Microsoft).
- The management organization is complicated, different pieces of the technology portfolio report up into different branches of Cisco management.
- The technology is not totally compatible - this will frustrate developers and other partners.
- Cisco still needs good relations with IBM and Adobe ... so expect all parties to try to work together around common goals.
What about Microsoft?
- Cisco is right in the face of Microsoft with WebOffice and Connect. It can deliver now while Microsoft continues to face a series of questions around its SaaS efforts. Hopefully, this will light a fire...
- Cisco is now the leader over Microsoft when it comes to hosted web conferencing. The next release of Office Live Meeting will bring Microsoft forward but WebEx has a powerful brand.
- Overall though - Microsoft still has a more cohesive set of technologies rather than a mix of several vendors products across different on-premise and hosted models. Given Cisco's lack of experience with applications, SaaS and so on - Microsoft has time to adjust and respond accordingly (MOLM 2007, OCS 2007, etc). Cisco now has assets and has placed its ante into the broader UC game. But right now, it's just the ante -- we need to see execution over the next year to see if Cisco can adjust to all of these various moves.