Cisco plus WebEx: smart or desperate?

by Mathew on March 15, 2007 · 2 comments

Coming so soon after the company bought a social networking platform (Tribe.net), Cisco’s $3.2-billion acquisition of WebEx makes it clear that the network equipment company’s interest in matters of the Web is more than just a passing fancy (although I suppose that it’s possible deals of that size qualify as a fancy at a giant like Cisco, which has a market cap of about $155-billion).

In any case, WebEx is an interesting purchase to make. I think Om is right that the service makes a natural pawn (or maybe a rook) in the chess game with Microsoft for supremacy in the in-between world of Web and desktop for corporate users. And from that point of view the deal makes a certain amount of sense as a positioning effort.

However, I also think Rafe Needleman makes an excellent point in his post at Webware, which has the wonderful title: “Cisco buys WebEx for the land — the product is a teardown.” Having used the service more than once, I can attest to the fact that in most cases it is difficult to configure and a pain in the ass to use, in contrast to more flexible (and cheaper) Web services such as Vyew.com and Adobe’s Connect.

In that sense, the deal doesn’t look quite so great — and the valuation looks rich at best. Paul Kedrosky asks whether Cisco even knows what it wants to be when it grows up.

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