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 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….
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.”
I totally agree with all of these points. Point 1 and 3 are really variations on the same theme: collaboration suites are the next generation of must-have enterprise software. It’s at the heart of Microsoft’s acquisition of Groove and Ray Ozzie’s ascent to the role of Chief Software Architect. (See my account of the original Live Software rollout with Bill Gates and Ray Ozzie in November 2005.) It’s why sharepoint has been described as “the golden application for Microsoft”. It’s why Breeze (now Acrobat Connect Professional) was such an important part of Macromedia’s strategy, and now Adobe’s.
Here’s the Google Trends graph of Sharepoint vs. Lotus Notes vs. Webex. While Webex isn’t really an equivalent product to Notes and Sharepoint, they are all in this enterprise collaboration space. As you can see, Sharepoint passed Notes in search volume in late 2005, and has been on a fairly steady upwards trend since its introduction. And both are still ahead of Webex in search volume.
But point 2 was the one that really got my attention: that the value may not have been in the application itself so much as in the network infrastructure (which is more Cisco’s bailiwick.) Even more thought-provoking was Steve’s conclusion, which I hope Cisco also comes to:
“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.”
This is a really important insight. To become a real platform player in Web 2.0, Cisco will need to open up both the application and the infrastructure. Steve is really right to point to Amazon as the leader in thinking of the Web as platform. Everyone else who is building web services platforms — even Google, who is the leader in so many other ways — is really just building application-layer platforms, allowing people to build extensions to their applications. But with S3, EC2, and SQS, Amazon has built services that allow others to build on their infrastructure, not just on their applications. And when a platform allows people to build whatever they want, look out!