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Why is Cisco interested in the Web-conferencing market? This seems outside of its core networking business.
What's in it for Cisco? Moving more companies to an IP telephony infrastructure. Cisco is attempting to move IP telephony to a larger share of the market, which will drive faster market growth. But it often takes a significant event to make a company change its PBX. Cisco is trying to augment IP telephony with other useful functions, such as collaboration, Web conferencing and video. That package makes it more compelling for businesses to move to IP. Why would a business choose Cisco for something like Web conferencing?
The network is key to making collaboration work. And it is natural that Cisco would be interested; it provides close to 80% of the world's network infrastructure. Cisco will stand behind its products. Because the products come from a big name like Cisco, businesses know it is going to work, and the features will work well with a Cisco infrastructure. What has Cisco been doing that shows you it is serious about this space?
Cisco has been investing heavily in IP telephony. It recruited an executive from Nortel Networks Inc. who had 20 years of experience with PBXs. And it had a recent announcement about IP video telephony. One of the problems with video conferencing has been that it is hard to use. In the past, you have had to have technicians there to help users launch a Web-conferencing session. Cisco is trying to make it as easy as using your phone. In January, Cisco completed its acquisition of Latitude Communications. What does that bring to the table?
Latitude brought in a large enterprise IP telephony conference bridge. It has bridging capacity for hundreds and hundreds of port. It also has a good Web-conferencing platform. Since Microsoft acquired PlaceWare in January of 2003, this acquisition helped Cisco plug a hole in its product suite.
Collaboration requires Cisco to move out of the wiring closet and onto the desktop. Does Cisco have a chance there?
It requires a different sales and marketing approach. One of the things we are seeing is that many enterprises have multiple network groups. They have one for data, one for phones and one for video conferencing. Now, all of these networks are converging. Cisco is in a good position here. They have contacts with the IT managers, the CIOs, the CTOs and so forth. They are a well-recognized brand in that area. Collaboration should also spur additional sales of routers and switches and network upgrades to support IP voice and video.
|E. Brent Kelly|
What can businesses gain from this?
These tools have been there all along, but they have not been available in a way that is easy for people to use. On the other hand, instant messaging, which is simple to use, has taken off like wildfire. But that is only part of what I call the collaboration food chain. You might send someone an IM to see if they are available, and then call that person on the phone. Then you might add a few other people to the call. You may want to show them something, so you'll need a Web-conference session. Then perhaps you'll need to look at something on video. So there is an increasing need for these tools. Are we talking about LAN- or WAN-based tools?
It is going to be a hybrid [of both]. What is driving the Web-conferencing market?
There is a mix of technologies converging on the network. Internet Protocol is enabling a lot of this. Instant messaging and other presence-based applications are creating a revolution. When we couple that with Web conferencing, you get a very compelling system. Cisco, Microsoft, Avaya Inc., Polycom Inc. and others are betting that there will be significant revenues coming in from collaboration applications.