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Cisco Thursday announced plans to acquire WebEx for $3.2 billion, giving the network equipment giant a leading position in the hosted collaboration-services market.
WebEx gives Cisco access to more than 2 million mostly small and midsize companies that use hosted online collaboration software, instead of buying their own systems. The move also puts Cisco in competition with Microsoft's Live Meeting and Citrix's GoToMeeting collaboration service.
The deal, expected to close in the fourth quarter of Cisco's 2007 fiscal year, is Cisco's largest since its acquisition of cable-TV equipment maker Scientific-Atlanta in 2005, for $6.9 billion.
"With the acquisition of WebEx, Cisco is continuing to invest in intelligent network technology and innovation and to use the network as a platform for the next-generation explosion of business and consumer applications," said Cisco Chief Development Officer Charlie Giancarlo during a conference call with investors, analysts and media Thursday morning.
"[WebEx's] network-based technology is a natural extension of Cisco's vision for unified communications and collaboration."
Buying WebEx now makes Cisco a hosted-applications service provider for the first time. Cisco offers similar functionality to WebEx through its MeetingPlace and Unified Communications products, but these offerings are geared to large corporations who can afford to build internal collaboration systems.
"It's about time" Cisco made this kind of move, says Zeus Kerravala, an analyst with the Yankee Group. "This is huge for Cisco. . . . Collaboration needs to be delivered in a number of ways. Not everyone wants to buy their own hardware and software to do it. If you want to sell collaboration applications to the small and midsize market, it's much easier to do in a hosted model."
Because WebEx is a Web-based service, it lets users set up meetings more easily with outside parties, which is harder to do with internally built collaboration systems, Kerravala says.
WebEx, based in Santa Clara, Calif., has 2,200 employees. It was founded in 1995 and went public in July 2000. The company reported $380 million in revenue in 2006.
WebEx has more than 2.2 million registered users in 85 countries, the company says. WebEx CEO Subrah Iyar and the WebEx business will continue to operate normally, and will report directly to Cisco's Giancarlo.
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Comments (11)
Regarding Mark LyndBy Anonymous on November 27, 2007, 5:58 pmMr lynd is a blow hard and loves to hear himself talk. Look into his history of lost opportunities at vetrix, hudson, TDI (TECSYS) and now Firescope...what a blow...
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To MrCarpenter: You mustBy Anonymous on March 24, 2007, 3:10 pmTo MrCarpenter: You must work for Microsoft, as you obviously know next to nothing about Cisco.
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This Does Not Make SenseBy Anonymous on March 24, 2007, 12:59 pmCisco 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...
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I find it pretty funny thatBy Anonymous on March 23, 2007, 9:04 amI 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.
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As far as it needs to go....By Video Conferencing Consultant on March 21, 2007, 10:25 amThis is great news for the field of online collaboration. The bandwidth is now here to take these collaborative products to the next level. Look for significant...
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