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: … I totally agree with all of these points. Point 1 and 3 are really variations on the same theme …
Context & Ripple Effects
Cisco's agreement to buy WebEx landed just yesterday — the deal was announced March 15 — and O'Reilly Radar is amplifying Steve Borsch's Connecting the Dots argument that this is a Web 2.0 platform play rather than a tools tuck-in, endorsing his points outright. The framing matters because Cisco has been signaling application-layer ambitions for months: it holds a 2006 patent claiming the triple-play bundle of voice, video, and data.
Two threads make the platform reading plausible. Cisco itself framed the acquisition as advancing its vision for SMB collaboration — a services market, not a box sale. And a separate rumor circulating this week that devices like Apple TV and DVRs from TiVo, Motorola, and Cisco could erode the 30-second TV commercial underscores how far past routing Cisco is positioning itself.
First-order effects
- WebEx's hosted meeting platform becomes Cisco's collaboration beachhead into the SMB market the company explicitly named as the deal's strategic goal.
- Cisco gains a recurring-revenue software business layered on top of its network equipment, changing what it sells from pipes to hosted workspaces.
Second-order effects
- Vendors selling on-premises collaboration and conferencing tools now face a rival bundling those functions with network infrastructure, pressuring them toward hosted offerings of their own.
- If Borsch's platform thesis holds, Cisco's next moves would be wiring WebEx into its other assets — the kind of integration its triple-play patent suggests it has been positioning for.
Third-order effects
- The deal is a data point in infrastructure vendors buying application-layer Web 2.0 companies to own customer workloads rather than just transport — a structure where the network owner captures the software margin.
- Whether Cisco can operate consumer-grade web platforms as well as it sells routers is the open question analysts like Borsch are implicitly testing; absorption of specialist teams is where such deals most often stall.
The trend: Network infrastructure vendors are acquiring hosted Web 2.0 application platforms to move up the stack from transporting traffic to owning collaboration workloads.