Cisco taking on Microsoft over unified communications

Collaboration wars heating up with Cisco, Microsoft and IBM

With one $3.2 billion acquisition, Cisco has gotten in Microsoft’s face and positioned itself to give the software giant a fight in the battle to supply corporations with unified communications tools from office applications to Web conferencing, experts say.

“Cisco has become a multiheaded beast all of a sudden," says Mike Gotta, an analyst with the Burton Group. “This deal puts Cisco aggressively in the face of Microsoft.”

Cisco, which lacked a strong presence in the small-to-midsized collaboration and unified communications market, has now filled that gap and then some.

While Web conferencing dominance is the obvious advantage Cisco gains by acquiring market leader WebEx, it is the other offerings from that company that help make the equation that much more interesting and a threat to Microsoft.

“All of a sudden Cisco has some assets in play,” says Gotta. “It might not know how to play them, but it puts them right in Microsoft’s face.”

Beyond Web conferencing, those assets include WebEx Media Tone Network (MTN), a global network and platform specifically designed for secure delivery of on-demand applications. Microsoft is trying to build the same thing with its collection of services under its Live brand.

In addition, WebEx has WebOffice, which runs on MTN and provides document sharing, calendars, databases and Web meetings. WebOffice is designed for small businesses, project teams and departments much like Microsoft’s recently introduced Office Live solution. (See Network World's Q&A with WebEx on how it stacks up to Microsoft.)

WebEx AOL/AIM Pro Business Edition provides group chat, VoIP capabilities, centralized administration, secure file transfers and integration with Outlook.

Microsoft is grouping a similar set of capabilities around its upcoming Office Communications Server 2007, Office Communicator client and Outlook.

In addition, WebEx AOL/AIM Pro Business Edition also integrates with WebEx business applications that are part of WebEx Connect. The integration creates the type of collaboration and application integration Microsoft also is eyeing between its Dynamics ERP and CRM applications, its online services and its unified communications platform.

WebEx Connect lets users integrate data from multiple applications and create a customized collaborative workspace that can integrate with local workflow and business processes. A set of WebEx MediaTone APIs lets developers integrate desktop and corporate applications or create mashup applications.

WebEx partners such as SugarCRM, which develops an open source customer relationship management application, have already adapted their applications for WebEx Connect.

In contrast, Microsoft won’t ship its hosted CRM service until the end of this year. CEO Steve Ballmer demonstrated Microsoft’s Dynamics Live CRM service on Wednesday at the company’s annual business applications conference called Convergence and called it “great example of how we're combining software and services to create exciting new opportunities for customers and partners.”

In addition, Microsoft last week laid out its unified communications platform at the VoiceCon conference and on Wednesday purchased speech-recognition vendor Tellme to add to its unified communications lineup.

Combined with what Cisco already has in its unified communications cupboard – such as Call Manager, Unified Presence Server, MeetingPlace and MeetingPlace Express – the vendor now has the tools to build a unified communications infrastructure for any customers despite its size.

“The value for Cisco is they bought the market leader, they bought a developed product and now they are beating Microsoft in the Web conferencing market, which is something they were not doing before this announcement,” says Irwin Lazar, an analyst with Nemertes Research. “Now Cisco can come in to a WebEx customer and say we can integrate with Cisco unified communications, Cisco videoconferencing, and Cisco this that and the other thing. It helps them make a more compelling argument. It gives them an end-to-end solution.”

Lazar say that will make it more difficult for Microsoft, which has been trying to get users off of WebEx and onto its LiveMeeting hosted Web conferencing with the idea that the next step would be integration with desktop software like Outlook and the portfolio of Microsoft unified communications tools.

Lazar, however, notes that for now Cisco plans to run WebEx as a subsidiary and has not placed it under its unified communications group.

“But they will be looking for ways to integrate WebEx and unified communications,” says Lazar.

The other questions, experts say, center on the other major player in this market, IBM.

Cisco announced a partnership with IBM just last week and the WebEx acquisition is poised to make that relationship more complex, especially given the fact that Cisco agreed to resell Lotus Sametime, which includes Web conferencing features.

“This is definitely a monkey wrench into that relationship,” says the Burton Group’s Gotta.

Learn more about this topic

Cisco-WebEx: FULL COVERAGE

* Cisco to buy WebEx for $3.2 billion

* WebEx key to Cisco's transition into applications

* Cisco-Microsoft smackdown coming

* WebEx customers hoping for innovation

Q&A: Cisco: Our strategy

Q&A: WebEx: What we bring Cisco

PODCAST: Billion with a B

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