Cisco buys WebEx for the land; the product is a tear-down

At $3.2 billion, the WebEx remote meeting software is overpriced. But the customer base and revenues make the deal pretty sweet.

I normally don't comment on industry financial dealings, but this morning I was surprised by the news that Cisco is acquiring the remote meeting services company WebEx, for $3.2 billion (official news release). When I first read this, I thought I was reading a news story that had gotten stuck in the tubes for five years and was only now surfacing on the Web. In the online market five years ago, before the Web 2.0 hype bubble began--and in the wake of crumbling airline finances--it would have made a lot of sense. Today, it's less clear.

While it makes sense for Cisco to add to its collection of communication tools, and Web conferencing certainly fits that bill, WebEx's main Web-conferencing offering is an old-fashioned product that's in serious danger of being technically eclipsed by products from Web 2.0 start-ups such as Vyew, Yugma, SlideShare (writeup coming soon), and others. WebEx is overpriced and awkward to use. Like other busy Web 2.0 bloggers, I get a lot of WebEx meeting requests--and in fact just finished with one--with the presenter and me cursing WebEx the whole way through.

WebEx does generate nice revenues (although not enough to justify this purchase price) and it does have a solid customer base. These assets are worth acquiring. But the main product itself is creaky, cumbersome, and overpriced. Cisco, if it's smart, will rewrite and reprice the offering soon.

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Software
About the author

Rafe Needleman reviews mobile apps and products for fun, and picks startups apart when he gets bored. He has evaluated thousands of new companies, most of which have since gone out of business.

 

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