Less than a week after Cisco delivered on their announced intent to get deeper into the cloud computing space with their own line of servers IBM is said to be in serious talks to acquire Sun Microsystems (JAVA).  This is the just one of what should be many moves to consolidate positions to address the “Compute 2.0″ opportunity that blurs the lines between servers, networks, storage and devices.  

Sun has blundered it’s way to only a 10% market share in servers but it will help put IBM firmly in the #1 spot ahead of a surging HP.  It makes it clear that IBM is going to take this battle seriously and Cisco may be surprised how competitive the old Big Blue can be if you come into their living room.   The hardware though is not what interests us the most.

Sun would bring IBM some very strategic software assets.  Java occupies a key role in enterprise computing and some open source products like MySQL are king in the more open general Internet space.   Sun has many software product lines but for something to matter in the context of IBM it has to be bigger than most of these.

If the deal goes through we will be especially interested in what IBM will do with StarOffice.  (An equal to Microsoft Office on Linux.)  Linux on the desktop has yet to catch on in any mainstream way but has seen some pockets of success with individuals and government organizations in Europe.   In the hands of IBM it might be a very different story and a very unpleasant outcome for Microsoft.  

The potential deal would make it clear that IBM will not sit back and watch Cisco gain share in the server space but we don’t yet know if part of this is to counter growing client computing influence from Google and Apple and the ability for Microsoft to rebuild itself on the back of Windows 7.

If IBM does take the initiative with OpenOffice they will again occupy a prominent space in the client computing space, at least on the software side.  With no personal computers or mobile devices they may be feeling that they have to do something to prevent Google and Apple be putting down roots from the client and mobile computing spaces.

We think of Cisco as an enterprise technology company although they are in ohter areas including Linksys and set-top boxes.  With the WebEx acquisition it stood to reason that there would be a push into the business market but we have been overwhelmed with junk marketing since signing for a WebOffice trial a few weeks ago.

Cisco/WebEx is sending out emails and calling with the hyperactive fever of an online mortgage company.  The pitch got to a point where we actually told Cisco we probably wouldn’t pursue our trial because their sales and marketing efforts were disrupting our business.

Amazingly after that we continued to get besieged and today received another flashing, spinning, promotional email offering us double storage and deferred invoicing if we convert by June 15th. (!!!!!!!!!!!!)

What’s odd about the current campaign is we have been users of both WebEx and Cisco technology before the acquisition.  This sort of absurd consumer style marketing isn’t even done by Microsoft or Salesforce.com.

Not a nice view of CSCO from a potential end-user point of view.  Nobody wants to deal with a firm like this.

– Kris Tuttle

Tags: Cisco, WebEx, Marketing, WebOffice

]]> http://blog.research2zero.com/2007/06/cisco-goes-nuts-with-webex/feed/ 2 http://blog.research2zero.com/2007/03/cisco-moves-deeper-into-microsoft-territory-with-webex/ http://blog.research2zero.com/2007/03/cisco-moves-deeper-into-microsoft-territory-with-webex/#comments Thu, 15 Mar 2007 16:13:23 +0000 Kris_Tuttle http://research2zero.com/blog/2007/03/15/cisco-moves-deeper-into-microsoft-territory-with-webex/

On the heels of the Microsoft announcement to buy TellMe yesterday Cisco has agreed to acquire WebEx for about $3B in cash. This is also our first company in our Web20 index to be acquired so we will need to select a new one in the coming months as this deal closes.

Microsoft and Cisco have had an awkward dance of cooperation and competition over the years since the first Microsoft Active Directory was launched a decade ago. Today this interaction is getting more heated as collaboration becomes central to corporate IT activities. Microsoft had acquired Placeware sometime ago is #2 in the market after WebEx.

WebEx has a network of 3000 servers and over 2M subscribers who use their technology as an on-demand platform for collaboration. Cisco sees that unified collaboration and communication are growing fast and particularly important in the SMB market when it can be offered in a SaaS format.

With $380M in C06 revenues Cisco is paying about 7.6x TTM sales. Guidance calls for minor reductions to earnings in F07 and F08 with additions coming in F09. Because WebEx has established distribution channels, partners and a strong business model it will be run as a stand-alone business and integrated into Cisco operations over time. This is said to represent a “new model” for Cisco. It seems similar to the VMWare structure at EMC for now. Cisco is talking about opportunities in the distribution channel but already has substantial established channels with resellers, direct and lower end products like Linksys.

These moves raise more questions:

1. If more and more people are going to use an expanded WebEx/Cisco platform to collaborate does it mean for the usage of Microsoft Office products?
2. Does this move by Cisco put more pressure on Google to add communication collaboration to their Docs and Spreadsheets platform?
3. Will all three of these vendors take steps to provide better interoperability between their offerings?

Chris Dedicoat, the President of Europe, wastes a good bit of time presenting the recently reported quarter which was quite good but well known history at this point!

Cisco believes that the architectural growth towards service-oriented architectures is the main reason their business is doing so well. [This is actually a pretty good point to consider.]

Another inwardly-focused riff on how they organize by geography and how innovation drives investment with a citation for Michael Porter. [Why do corporate presenters insist on this junk?]

Bravely showed the productivity gap between the US and Europe. This is a key focus for European companies that want to do what they can to close the gap. Germany was mentioned as being especially fertile ground for Cisco with this backdrop.

Looking at the service provider market Cisco is building their strategy on top of CRS-1 which is providing next generation IP networks for service providers. The Scientific Atlanta acquisition was a key part of this strategy for video. It’s now two player market with Motorola. There is still a good deal of art rather than science in delivering video.

Video convergence will drive the need for virtualized video services. Demand is coming from switched video at home, enterprise video for collaboration, mobile video and video protection for physical security. Video customer examples included T-Online for home video (largest MSFT IPTV customer), NOOS move to numericable (from Docsis3), N9UF Cegetel, Free Telecom, BT and FastWeb. [Pretty impressive examples on the video side.]

Content and device bounders are blurring as more providers and end-users are looking to customize their experience around how they work, live, play and learn.

Cisco is hoping to change their position as a plumbing provider to more of a platform.

The new TelePresence offering entails very high definition video (1080), spacial audio and no delay in communication. The experience is extremely good and will pave the way for broad adoption over time as a substitute for physical collaboration.