How far does Cisco take collaboration?

The blogosphere Friday is still abuzz with Cisco's surprise $3.2 billion bid for WebEx, with conferencing rivals, industry analysts and tech observers offering up mostly positive views. Many pundits conclude that Cisco will reap rewards from the deal as long as it doesn't screw things up.

Zane Safrit, CEO of Conference Calls Unlimited in his now-ironically named blog Thoughts from leading a small company in a rapidly changing industry writes the usual 'the-news-is-great-for-us' message that a competitor would say, but adds that the loser is WebEx's brand as Cisco is the bigger cheese. The set top box and consumer networking industries, respectively, are saying the same about Scientific-Altanta and Linksys, but those Cisco units are still operating under their maiden names. Safrit also says: "Webex is a service company; Cisco is a hardware company. Never the twain shall meet."

Mike Gotta writing in Collaboration Loop says Cisco is not just getting Web conferencing out of the deal; it will be getting its hands on the WebEx Media Tone Network, a distributed P2P network for Web conferencing, of which another blogger Steve Borsch in Connecting the Dots said "alone is worth the price Cisco will pay"; data centers around the world - including China; and a software-as-a-service collaboration platform.

Tim O'Reilly in O'Reilly Radar says "the value may not have been in the application itself so much as in the network infrastructure (which is more Cisco's bailiwick.)." He says he agrees with Mike Gotta's assertion that Cisco should "deliver something akin to what Amazon has done with Amazon Web Services and give the world of creators a scalable unified messaging/communications infrastructure upon which to build...affordably," O'Reilly says: "Cisco will need to open up both the application and the infrastructure." When was the last time Cisco opened up any of its technologies?

Frank Gens, IDC senior vice president, research, blogs that as well as putting Cisco bang in the middle of the SaaS movement, WebEx will help strengthen Cisco's SMB portfolio. IT spending in that market is growing at almost twice the rate of the large enterprise market, and "vendors who don’t have a strong focus on SMBs will be marginalized in the next several years." 

Paul Kedrosky writing in Infectious Greed says: "You can argue, I suppose, that WebEx sucks up bits, and Cisco sells bit-shunting equipment, so they're complementary, but pretty much everything online sucks up bits, so by that measure we should expect CiscoTube and a search engine next. And while that's possible, I doubt it will happen." 

More views from the blogosphere. 

I find it pretty funny that you mention theft of anything in defense of Microsoft. If you know anything about history, MS was founded on a theft.

To MrCarpenter:

You must work for Microsoft, as you obviously know next to nothing about Cisco.

Cisco is taking a huge diversion from it's core business, which is to sell gear. The fact is Cisco's products aimed at the SMB market basically suck, and they have huge exposure here. The products are expensive, and even more costly and cumbersome to implement and manage. Growth in the large enterprise LAN infrastructure market, that has been Cisco's bread and butter is not expanding as rapidly anymore and Cisco has been searching for a way to tap the fast-growing SMB market... that much is true.

Typically Cisco makes acquisitions to broaden or strengthen is product portfolio - basically to sell more gear. Even if you look at Scientific Atlanta and Linksys, some thought they were questionable moves but in the end it is just really about Cisco expanding into different markets (cable and consumer, respectively) to sell more gear.

Cisco buying WebEx, a web-based collaboration service provider, is clearly a move to tap the SMB market. However, I think it is a huge diversion from their core competency and therefore I question it. It may operate as a separate company and stand on it's own but why own it? In my mind Cisco would have been better off to throw those resources at strengthening it's technology partnerships with Webex, every other ASP, and their current partners by building hooks and more integration into Cisco products. To me this is a stab in the dark at the SMB market. Following this strategy, next they'll start gobbling up Salesforce.com and every other successful ASP.

I think Cisco should have stuck with their time-tested strategy of partnering. AT&T and every other Cisco partner is salivating over the SMB market also - there are already a host of companies and service offerings catering to it. Why not just work with all of those companies to further integrate their SMB service offerings with Cisco products? Buying Webex pits Cisco directly against some of it's largest partners. Another reason why this makes absolutely no sense. Also, what happens when all of these SMBs eventually grow and mature into larger companies? Is Cisco then going to attempt to migrate them off of their hosted solution and onto a CPE-based solution? I'm trying hard to udnerstand the benefits to Cisco but I'm just not getting it, but I'm also not a Sr VP of Business Development at Cisco Systems...