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Q&A: Inside Cisco's $3.2 billion WebEx bet

Cisco exec says WebEx technology fits with Cisco's existing unified communications offerings.

By Phil Hochmuth, Network World
March 15, 2007 05:17 PM ET

Network World - Cisco's plan to acquire WebEx for $3.2 billion brings the router/switch vendor into a whole new market, and is indicative of the overall direction the company wants to take — towards software, collaboration and services. Ned Hooper, Cisco's vice president of corporate business development, spoke with Network World Senior Editor Phil Hochmuth about the deal, where WebEx fits into Cisco's collaboration strategy, as well as how the deal relates to its overall acquisition strategy going forward.

(Also see Network World's Q&A with WebEx's Gary Griffiths for WebEx's take.)

In acquiring WebEx, Cisco is entering the hosted applications business. What are the challenges in adopting this new business model?

That is being driven by our customers. We look at customers changing in their desire as how to buy and deploy different technologies and capabilities. As we look at the collaboration products that WebEx offers, interestingly, they have the hosted environment, which is what they are offering today. They also offer a premises-based system, where a customer can buy a fully contained system, but customers haven't bought it, because the power of that hosted model, when you talk about business-to-business communications, has been very strong for their customers.

Could customers expect to see a common brand or combined technology between WebEx and Cisco's premises-based collaboration products, such as MeetingPlace or Unified Communications Server?

We see the WebEx product and capability and our current unified communication products and capability to be very complementary. WebEx has built a leadership in data collaboration. We have leadership in voice and video technologies. Over time, we believe very much that there is a convergence of voice, video and data into online collaborative environments, which will be embraced by all of our customer segments. That's one of the long-term opportunities we are looking at as part of this acquisition.

Was Cisco a WebEx customer prior to the acquisition?

A small one.

Cisco is entering a new market - hosted services — but your top competitors here are familiar: Microsoft, with its Live Meeting, and Citrix's GoToMeeting. What will differentiate Cisco's hosted collaboration offering from other vendors' products?

What our customers have been asking for is to continue to build out the network as the platform. What that means is the network is the one pervasive element in services. It touches everything. By enabling that platform to provide applications across enterprises and [small-to-midsize businesses] and service provider customers, we enable our customers to do new things and expand capabilities.

WebEx is a platform. It is a communications/collaboration platform that is market leading in business-to-business communications. And it aligns and fits very well with our network-as-a-platform architectural strategy. They, like us, embrace partnerships from people who are developing specific applications, to be able to run on top of that platform. So it is a very clean fit for us and a very clean fit for what our customers have been asking us to do for them … We see the network and the build-out of the network as a platform certainly as a competitive advantage that Cisco possesses.

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