March 16, 2007

Cisco Acquires WebEx, as Big Company Gets Bigger

From 1999 to early 2001, I got my feet wet working as the Web Marketing Manager at 3Cube, a Silicon Valley startup looking to enhance Internet Communications through Web-based faxing, conference calls, and Web meetings. While we toiled away trying to take on new customers one at a time, WebEx had raised tens of millions, asking RuPaul to tell the world in a best-forgotten Super Bowl ad that "We'd Better Start Meeting Like This". Needless to say, they won, and we lost, even if I still believe we had the lead in technology. Something about brand awareness and sheer execution really does work after all.

Yesterday, Cisco shook up the tech industry by announcing a $3.2 billion acquisition of WebEx, seeing the traditional switch and routing company further diversify its business model. Cisco and others lauded the deal as an SMB (Small and Medium Business) play, as Cisco is trying to become more consumer friendly, with a goal of being less associated with corporate datacenters than in years past. The company even swapped out its well-known logo for a rounder, more Web 2.0 look and feel.

But beyond the surface announcements, for many of us who make a living in the Silicon Valley, this type of corporate consolidation raises some concerning questions. When the Big company (Cisco) buys a Smaller company (WebEx), will they continue to innovate, and will we ever see the business again?

History is littered with companies being swallowed up by monoliths like Cisco, Sun, Microsoft and Oracle, never to be seen again. Founders and key employees leave, and companies lose momentum. The number of companies from whom you can get a solution is limited, and hitting closer to home, there are fewer companies where you can get a job. In almost every corporate merger and acquisition, you see overlap and eventual layoffs.

Shortly after I left 3Cube in a layoff that took out Marketing, Sales and Business Development at the beginning of 2001, the company and its assets were purchased by Oracle, who had big hopes of adding desktop sharing and conference calling to its iMeeting product. Apparently they did, but you wouldn't know it.

I don't know of anybody who turns to Oracle for remote meetings and collaboration. Everybody uses WebEx. Now that Cisco has WebEx under its corporate umbrella, will they operate it as a separate service, with the brand name staying intact, or will it turn into the Cisco Meeting Service, powered by WebEx, and see a complete stalling in feature innovation? I have no idea. I don't think anybody has the answers.

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