Cisco buys WebEx for the land; the product is a tear-down

I normally don't comment on industry financial dealings, but this morning I was surprised by the news that Cisco is acquiring the remote meeting services company WebEx, for $3.2 billion (official news release). When I first read this, I thought I was reading a news story that had gotten stuck in the tubes for five years and was only now surfacing on the Web. In the online market five years ago, before the Web 2.0 hype bubble began--and in the wake of crumbling airline finances--it would have made a lot of sense. Today, it's less clear.

While it makes sense for Cisco to add to its collection of communication tools, and Web conferencing certainly fits that bill, WebEx's main Web-conferencing offering is an old-fashioned product that's in serious danger of being technically eclipsed by products from Web 2.0 start-ups such as Vyew, Yugma, SlideShare (writeup coming soon), and others. WebEx is overpriced and awkward to use. Like other busy Web 2.0 bloggers, I get a lot of WebEx meeting requests--and in fact just finished with one--with the presenter and me cursing WebEx the whole way through.

WebEx does generate nice revenues (although not enough to justify this purchase price) and it does have a solid customer base. These assets are worth acquiring. But the main product itself is creaky, cumbersome, and overpriced. Cisco, if it's smart, will rewrite and reprice the offering soon.

[carli007]

Yugma stands a good chance of picking up....

...picking up Webex customers, especially SMB. They're my favorite right now. They are a lot easier, priced to save 75%, and they support Mac's really well. Webex really struggled with that. Will be interesting to see how things play out.

[dean.collins]

Nope - makes perfect sense, read up on Orative and

Lol - yep while Cisco may be buying a trusted 'brand' in Webex it still doesn't make any sense to a lot of people especially the way it's been explained in this article.

It does sound like the old dot com buybble strategy of "Synergies"

I have a joke theory - The acquisition strategy is being driven by the Treasury Department in Cisco who have so much cash in the bank just sitting there they decided the ROI on the acquisition was higher than the T bills they are currently invested in (and less work to manage as you said it's already a stable and trusted brand).

BTW I have another theory as well but for that you'll need to google up orative (or go to my blog and search on 'Orative').

It's just the evolution of communication enablement, be on the lookout for an IM acquisition soon as well.



Cheers,
Dean Collins
www.collins.net.pr/blog