Cisco's Big Deal

Cisco is buying Webex for over $3 billion. That’s a substantial amount even for Cisco, a company known for aggressive M&A. It’s especially significant because Webex doesn’t make any of the things Cisco is known for — routers, wireless devices, network management services, etc. It offers web-based software for online collaboration. This deal comes after two smaller social networking acquisitions, Tribe.net and Five Across.

Clearly, something is afoot at Cisco. When you see a company strike out in a radical new direction like this, it’s usuaully a sign of panic (the core business is dying), or a response to a competitor’s actions. Neither seems to be the case here. Cisco weathered the crash, and is now doing very well thank you in its traditional markets. And I don’t see Juniper, or Nortel, or Sun, or Alcatel, or Siemens going gaga over social networking and collaboration software. So what gives?

Cisco is either being brilliant or idiotic. I incline toward the former, as I explained earlier this month. Even if they are wrong, though, it says something significant about the state of the industry and its future. If I were looking at key trends, I’d sure want to know just what Cisco is thinking.

Makes me extra-glad Cisco will be the premier sponsor of Supernova 2007….