Commentary: Eyes on the Enterprise—Cisco's Wake-Up Call
Cisco’s acquisition of WebEx is a major wake-up call that should be ringing alarm bells across the enterprise multimedia sector. The rules of competition for technology 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. Taken in this context, 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.
It will take a good two to three years for Cisco to close the deal and then integrate its video capabilities into the WebEx offering in a viable way. But once that happens, the impact on the enterprise multimedia sector will be profound and sweeping. Assuming that Cisco can successfully integrate easy-to-use but effective video solutions into the WebEx platform, the rules of the sector change.
No longer would online video primarily the province of large companies with big IT departments and the need to communicate globally using web audio and video.
Rather, multimedia production in an integrated Cisco/WebEx world becomes a service-based offering that is more 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 ahead of the coming transformation. Cisco makes the video pie grow larger. As Cisco/WebEx helps to generate more publishing of online video content for business use, the demand for tools to better manage content and track its use will soar. Companies that add value in the way companies leverage their growing libraries of multimedia content will sustain the potential for significant upside growth.
And vendors in the trenches of the enterprise multimedia market are likely to benefit from on-going jockeying among the titans of the technology industry, as well.
It’s hard to believe that the likes of Microsoft or the leading makers of telecommunications gear will stand idly by and allow Cisco to dominate the market for hosted video business communications without a challenge. Significant opportunities will emerge for vendors to partner (or sell out to) Cisco rivals that need to challenge Cisco’s pending push into mainstream, hosted business video.
No need for alarm clocks any more. This industry sector is about to get very interesting. Sleep at your own peril.