Cisco Fights For More Space On Desktops With WebEx Deal

Taking On Microsoft
No. 2 in the hosted collaboration market is Microsoft's Office Live Meeting, with an 18% share, Forrester says. Microsoft has offered Live Meeting since it acquired PlaceWare in 2003, and the company says a new version is due soon. Citrix Systems offers a similar hosted service called GoToMeeting, and Hewlett-Packard launched Halo, a high-end videoconferencing service, in 2005. Polycom also competes with WebOffice conferencing and RPX for telepresence. IBM has on-premises Lotus Web Conferencing that includes application sharing and optional voice and videoconferencing, plus its lineup of Lotus collaboration apps from Notes e-mail to its upcoming Quickr collaboration portal.

Cisco's Portfolio WebEx (pending) Web-based conferencing tool sold as a service. Simplicity sells. MeetingPlace Conferencing tool strongest in voice and video conferencing, includes file and application sharing. Offered hosted, but mostly on-premises. Unified Communications Joins video, voice, and data sharing into one interface and infrastructure. Cisco Web Collaboration Web collaboration for call centers, shares Web pages and apps with customers. Telepresence Meeting Studio-based video conferencing at a steep price.

Microsoft is bolstering its conferencing functionality with on-premises, server-based conferencing in Office Communications Server 2007, due this summer. Office Communications Server gives Microsoft an edge over Cisco's unified communications platform, and the WebEx deal narrows but doesn't completely close that gap. Cisco has plug-ins that let users make phone calls from within Microsoft Outlook and Internet Explorer, but it doesn't have anything that rises to the level of SharePoint collaborative content portal, which supports blogs and wikis and integrates tightly with other Microsoft applications.

Cisco's moving fast, though. Since last summer, it has made six acquisitions in the area of collaboration. Last June, it acquired Metreos and Audium for their application integration and development environments for voice applications. In October, it bought Orative to extend its unified communications portfolio to cell phones and smartphones. Then came two companies with social networking assets--Five Across and parts of Utah Street Networks. Those social networking tools could potentially be bundled into WebEx, too.

Cisco understands it will soon find itself in a collaboration market centered around software. Cisco is taking a more holistic view of networking, one that encompasses not only routers and switches, but also human interaction, writ large.

Cisco's always been an acquirer, and Giancarlo says that will continue, with big deals like WebEx that bring in technology and a customer base, and smaller deals like Orative, whose technology already has been integrated into Cisco's unified communications line. It'll be more complicated, however, for Cisco to figure out what features should be in each of its many tiers of conferencing technology, from Web-based WebEx to MeetingPlace to its ultra-high-end telepresence systems.

WebEx illustrates the challenge that awaits Cisco as it targets technology end users. Cisco paid a 23% premium for WebEx, a product that delighted users with its simplicity. Cisco needs to make WebEx part of its larger product portfolio and add features, without killing WebEx's ease of use in the process. It's a challenge Cisco's main rival in collaboration, Microsoft, knows all too well.