Why in the world would Cisco buy WebEx?

When Cisco bought into the social networking game, there were a lot of folks in the blogosphere scratching their heads wondering why they did it. I didn’t pay much attention to this acquisition since it seemed tactical and not terribly interesting. But now with Cisco buying WebEx (press release here) it sheds a whole new light on their potential strategy to become even a bigger and more material part of the Internet-as-a-platform layer.

What could this mean and why should you care?

If you’re a developer, it’s important to keep an eye on strategic moves since (by their very nature) companies try to position themselves for category dominance. Unfortunately, this often translates into trying to wrest control of standards and protocols or otherwise defend against competition, maintain growth and enjoy huge gross margins often to your detriment.

If you’re a buyer of I.T. products or services, you need to understand what’s happening strategically so that you know which horse to bet on and ensure you don’t paint-yourself-into-a-corner with some given vendor and their approach.

But there’s alot more to this acquisition than meets the eye.

If you consider what Content Delivery Networks (CDN’s) like Akamai and Limelight bring to efficient Internet content delivery, then this acquisition makes more sense. CDN’s deliver regardless of the usual internetwork latencies and as such are vitally important if you’re a global brand to ensure your stuff gets to people quickly anywhere in the world. This is even more important now since many of us are stuffing the Internet full of video and other huge files. This acquisition thus begins to make strategic sense on several fronts:

1)  Unified messaging is the buzzphrase that every enterprise vendor in the game is pitching and/or striving to offer. As voice becomes an integral part of every Internet-centric communication (collaboration, virtual worlds, et al), it is imperative that unified communications products (voice, video, email, IM, fax, etc.) are tightly integrated within any vendor’s software offerings or suites. At a minimum, Web conferencing is SUCH A FUNDAMENTAL PART of online collaboration — which I write about often and you KNOW is exploding — buying the Web conferencing leader (87% market share) instantly positions Cisco as an infrastructure-centric player

2) Scalable delivery. WebEx early on built their proprietary MediaTone network. In my view, that network alone is worth the price Cisco will pay. When you examine the revenue picture of Akamai, Limelight and others — without even knowing what’s on the WebEx roadmap for future services — this makes even more strategic sense. I can only guess that scaling the MediaTone network to handle CDN-like services will be a relative no-brainer

3) Lastly, think about the future of collaboration. Will it be a two dimensional, flat-file world? Nope. It will first be a social networking, collaborative place — bringing together project/task management,  file management, calendaring and more — but will absolutely require incredibly rich communications to be an integral part of these offerings. Next up will be virtual spaces that companies will begin to adopt and content delivery, rich communications, near-guaranteed performance, high security and a platform upon which to build will be essential.

Web 2.0 hosted offerings are amazing and the energy, effort and enthusiasm — and paradigm shifts as they disrupt the status quo and push the envelope on what’s possible — are still ones that most CIO’s wouldn’t dream of betting their businesses upon. Which ones will be successful? It’s anybody’s guess right now and — for the same reason there’s alot of reluctance to adopt open source software — leaders need to be pretty certain that their vendor will back ’em up and be there with performance when needed.

This is a really smart move by Cisco…but I only hope that they’re going to 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.

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  1. Michael's Thoughts on March 15, 2007 at 4:30 pm

    Daily Report, Mar 16

    Team Collaboration Cisco Buys WebEx for $3.2 B … Wow, Cisco bit the bullet and announced the acquisition of WebEx for $3.2 billion in cash. “Cisco believes the network is a platform for all forms of communications and collaboration, and

  2. O'Reilly Radar on March 16, 2007 at 10:39 am

    Why Cisco Bought WebEx

    Connecting The Dots has a very interesting analysis of why Cisco bought WebEx. Steve Borsch makes very clear why this acquisition is a Web 2.0 platform play: When Cisco bought into the social networking game, there were a lot of…

  3. Davis Freeberg on April 2, 2007 at 10:49 am

    Best Graphic Ever!

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About Steve Borsch

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Podcasting hit the mainstream in July of 2005 when Apple added podcast show support within iTunes. I'd seen this coming so started podcasting in May of 2005 and kept going until August of 2007. Unfortunately was never 'discovered' by national broadcasters, but made a delightfully large number of connections with people all over the world because of these shows. Click here to view the archive of my podcast posts.