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Cisco Acquires Webex, Beefs Collaboration

Posted on Thursday, Mar 15th 2007

Cisco plans to buy WebEx for $3.2 billion in cash. Under the terms of the deal, expected to close in the fourth quarter, Cisco will purchase all outstanding shares of WebEx for $57 a share. WebEx shares closed at $46.20 Wednesday on Nasdaq, and last I checked, it was at $56.45.

I love this deal. Webex, as I have written in several previous posts, is perfectly aligned with the Enterprise 3.0 trends, the SME growth market trends, and has overall done a great job executing on a simple value proposition : web conferencing and online collaboration. [The Enterprise 3.0 framework is here.]

Cisco, recently, has been making moves into video conferencing (Telepresence product line), and other collaboration areas, and I think this acquisition would give them exactly what they need to become a big player in the area, and move upstream, challenging Microsoft’s strongholds. (Recently, Webex has even announced a SME hosted email offering a la gmail.)

In terms of the competitive landscape in online collaboration products, Microsoft and IBM both have fairly comprehensive suites. The best Webex competitor is with Adobe, a business that in my opinion does not belong in that company, and should be divested. If it is divested, Oracle or SAP could buy it, as both companies need to beef up their collaboration strategies.

But clearly, with the Webex acquisition, Cisco has bought itself a great opportunity to be a big player in Enterprise 3.0, coming at it from the communication layer, while the others come from the application layer. It is true, that as far as collaboration is concerned, the application layer and the communication layer are converging, and it would be interesting to watch how Cisco would take advantage of its kingpin position in the communication eco-system to further the Webex cause.

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[…] My take is, Collaboration will become the battlefield for these two titans’ epic battle. I have already written about this last week. […]

Sramana Mitra on Strategy » Blog Archive » Cisco’s War Cry Against Microsoft Tuesday, March 20, 2007 at 9:47 AM PT

Please read my blog about how I think WebEx is smart to sell out to Cisco at this price.

We have successfully displaced WebEx at a Fortune 1000 company with over 100,000 employees with a very low cost on-premises solution. Web conferencing will become a commodity in short order. There is not enough time for Cisco to earn their money back.

Herb Levitin Wednesday, March 21, 2007 at 6:28 PM PT

[…] My sense is, Benioff is also eyeing that opportunity, and will acquire other pieces (like Web Conferencing, Project Management, On Demand Office, Contract Management, etc.) to pull together a compelling […]

Sramana Mitra on Strategy » Blog Archive » Steps into the Main Arena Tuesday, April 10, 2007 at 6:20 PM PT

[…] I have recently written several pieces on the Enterprise 3.0 and the Extended Enterprise trend. In this article, I am going to cover a company that aligns well with the trends of collaboration and the Extended Enterprise, a space that has really heated up of late, following Cisco’s acquisition of Webex. […]

Sramana Mitra on Strategy » Blog Archive » Citrix: Acquisition Target for SAP, Oracle Wednesday, June 20, 2007 at 5:44 AM PT

[…] and strategy consultant Sramana Mitra, writes Cisco plans to buy WebEx for $3.2 billion in more | digg […]

Binary Insanity » Blog Archive » Cisco Acquires Webex, Beefs Collaboration Friday, July 13, 2007 at 3:16 PM PT

[…] with Tandberg. Polycom itself could be an interesting merger with another networking player, not dissimilar to the Cisco-Webex story, drawing on its twin trend alignment: online video and […]

Online Video Beneficiaries: Polycom - Sramana Mitra on Strategy Wednesday, September 5, 2007 at 7:06 AM PT