By now, any interested reader should have been able to get their fill of of news stories about the Cisco acquisition of WebEx. Overly cautious types will point out that this is not a done deal, merely a tendered offer accepted by WebEx management. WebEx shareholders could vote it down or another company could come in with a higher competitive buyout offer. The odds are tremendously low for either of those scenarios to occur.
Cowen and Company’s Peter Goldmacher says that a big “data oriented vendor” such as IBM, Oracle, or SAP could decide to go after WebEx as a data platform instead of a communications platform. Others have bandied about the possibility of Google or Yahoo bidding for WebEx to offer unified desktop applications and communications as part of an expanded hosted services platform. Nobody really expects any of these companies to get into a bidding war with Cisco though. The industry consensus is that the deal is a feteaccompli.
Analyst and blogger reactions have been mostly positive about the acquisition for both companies. It is seen as giving Cisco an entree into the small and medium business (SMB) market to broaden their reach from hardware designed for use in large enterprise data centers. It also gives them a way to expand the use of internet-routed data and thus, the use of more of their routers. Surprisingly, I haven’t seen many articles talking about Cisco’s past tentative steps towards offering combined collaboration services.They gave a shot at introducing a package with integrated telephony and web conferencing called Cisco Unified MeetingPlace, which I briefly surveyed at the Collaborative Technologies Conference last June. That was based on an OEM arrangement with Macromedia Breeze and doesn’t seem to have had much traction. I think we can guess where that partnershipis about to go!
The best early coverage came from Network World and LinuxWorld, who got interviews with executives at Cisco and WebEx to get their initial statements about the synergies in the acquisition. LinuxWorld interviewed Gary Griffiths, president of WebEx products and operations. NetworkWorld interviewed Ned Hooper, president of corporate business development at Cisco.
Ephraim Schwartz also wrote a very good opinion piece in InfoWorld, detailing how the acquisition signals Cisco’s move into Software-as-a-Service (SaaS) as a core part of their future success. It’s worth reading. The other article I recommend on this subject is from Tim O’Reilly at the O’Reilly Radar blog. He calls the acquisition aWeb 2.0 platform play.
I have seen a few dissenting voices in the wilderness. David Utter wrote a piece titled “Cisco WebEx Buy Could Quickly Crater.” He is skeptical about the worth of the technology because of potential new advances in video multicasting, but I think his underlying proposition is incorrect. WebEx’s strength and value is not to enable videoconferencing.It enables web-based collaboration from small interactive group meetings to large, formal webinars. They also have a growing application business in their WebOffice shared workspace offering and a platform mashup play with WebEx Connect. None of those are vulnerable to the videoconferencing competition that Utter writes about.
Tom Keating says in his TMC VoIP & Gadgets blog that Cisco overpaid because the hosted collaboration space is very crowded and because the deal puts them into competition with Microsoft. I’m not qualified to comment on the pricing of the deal, but I would say that WebEx is valuable because of these points!
And for the most blunt minority view on the subject, take a gander at Rafe Needleman’s Webware Rant. He says that WebEx’s main product is “creaky, cumbersome, and overpriced.” He also says that it is in danger of being technically eclipsed by products from Web 2.0 start-ups such as Vyew, Yugma, and SlideShare. This viewpoint again shows a personal bias towards simple slide share or application sharemeetings in a person-to-person or small group context. That’s only one piece of the WebEx product stack (and is unlikely to be financially important for them going forward). But Needleman is a fun read.
That should give you some material to chew through that is more than a standard restatement of the acquisition press release. I’ll check in again soon with the view from the vendor community.
