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Cisco and WebEx: wake-up call.

The alarm clock has been set. The sleeping giant in enterprise web communications is slated to wake up at about this time in 2009.

That's the net effect of Cisco Systems' deal announced in March to buy collaboration king WebEx Communications in a transaction valued at $3.2 billion. For many in the business world, the transaction has pretty much fallen off the radar screen, just another tech deal to fill the pages of The Wall Street Journal for a day.

But that perspective is short-sighted, to say the least. Without a doubt, the Cisco/WebEx combination will do far more to transform the online video space than Google's acquisition of YouTube last year.

It will likely take at least two years, but Cisco and WebEx will almost surely blend their strengths in a way that will fundamentally change the market for the business deployment of online video communications.

That prediction may come as a surprise to some who recall my past rants about the web-conferencing market.

It's true that I've never been the biggest fan of WebEx. And the folks at WebEx respectfully disagreed with me last year when I used this column to explain how and why collaboration technology is heading down the slippery and treacherous slope towards commodity status. (It's funny how firms portraying themselves as growth companies get sensitive when you tell the world that their franchise service is becoming a commodity.)

But as an industry pundit focused on the enterprise multimedia space, I've always been frustrated by WebEx's lack of attention to online video. In the world of business web communications, WebEx is the 800-pound gorilla. It has the customer base and cash cushion to do whatever it wants. Historically, the WebEx road map has never included a serious commitment to developing video-oriented extensions to its core platform.

Sure, the company offered integration of some webcam video capabilities and even made some token acquisitions in the space. But never ever did one get the feeling that WebEx was truly committing itself to promoting and openly encouraging the integration of video communications capabilities.

The company's seeming willingness to settle for domination of the collaboration space while ignoring the opportunities in the video realm is what made WebEx the sleeping giant in the web communications sector. The acquisition is a major wake-up call that should be ringing alarm bells across the enterprise multimedia sector. The rules of competition for vendors in this sector are now poised to change-and change in significant ways.

Remember the one fundamental rule for evaluating Cisco's strategic moves today: Everything that Cisco is doing in the market today can be tied to its aspirations for pushing more video through the networking gear it sells to corporate users and carriers. The WebEx acquisition is not about Cisco getting into the web collaboration business. It's about Cisco baking its advanced video capabilities into the WebEx platform and finally dragging WebEx into the multimedia communications age.

If Cisco can integrate easy-to-use but effective video solutions into the WebEx platform, the rules of the enterprise multimedia sector change.

No longer will online video be primarily the province of large companies with big IT departments and the need to communicate globally. Rather, multimedia production in an integrated Cisco/WebEx world becomes a service-based offering that is accessible for small- and mid-sized companies. Essentially, WebEx is the vehicle that Cisco will use to make video communications commonplace for mainstream corporate America.

The marketplace ramifications of this Cisco/WebEx combination are significant. First, technology vendors in the multimedia publishing and content creation sector run the risk of seeing their core product line become commoditized. As Cisco/WebEx drives down the cost of publishing business multimedia, profit margins for existing content creation tools are likely to tumble.

At the same time, opportunities will emerge for companies that position themselves correctly. As Cisco/WebEx helps to generate more online business video content, the demand will grow for tools to better manage and track content. And vendors in the trenches of the enterprise multimedia market are likely to benefit from ongoing jockeying among the titans of the technology industry as well.

It's hard to believe that the likes of Microsoft or the makers of telecommunications gear will stand idly by and let Cisco dominate this market. Significant opportunities will emerge for vendors to partner with (or sell out to) rivals that challenge Cisco's pending push into mainstream, hosted business video.

No need for alarm clocks any more. This sector is about to get very interesting. Sleep at your own peril.

Steven Vonder Haar (svonder@interactivemediastrategies.com) is research director of Interactive Media Strategies.

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Title Annotation:Eyes on the Enterprise
Author:Haar, Steve Vonder
Publication:Streaming Media
Date:Jun 1, 2007
Words:787
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