Cisco and Microsoft Join Race for Online Software Domination

By Ross Tieman

Cisco Systems and Microsoft have finally gone head-to-head in the fast-merging arena of online software and conferencing.

The two US giants are converging from the opposite ends of the internet in a race to dominate the market for services combining telephony and documents on the web. They are trying to outsmart the world’s dominant search provider, Google, which last month launched an upgraded package of online software and telephony tools.

In the latest move, Cisco, world leader in clever telephone network equipment, is paying 3.2bn (Pounds 2.2bn, $4.3bn) for WebEx, a leader in online video conferencing and software as a service. WebEx offers a subscription-based package of smart online business applications that have many of the functions of Microsoft’s Office suite, which runs on more than 90% of the world’s PCs.

Using only a web browser, you can click on to the WebEx site and compile and edit documents, working in partnership with colleagues wherever they are in the world. The service can include features that allow you to talk with colleagues about the document you are all editing; see whether collaborators are signed in at their desks or using their phones; and communication via a smartphone.

The purchase brings Cisco into direct competition with Microsoft, which has introduced its own package of online software and communication tools, including telephony, under the Microsoft Live banner.

Microsoft’s move is designed to capitalise on the growing capacity of the internet to create a virtual office, in which people scattered around the globe can collaborate in research, healthcare and business projects. But it also reflects the threat to its traditional pre-installed software packages from increasingly reliable online offerings.

Only the day before Cisco’s agreed acquisition of WebEx, Microsoft unveiled the purchase of Tellme Networks, a specialist in voice recognition software, for a rumoured $800m. Tellme makes the software that automates dial-in switchboards and services, allowing you to check flights or the whereabouts of a package by talking to a computer.

With a $20bn war-chest, Cisco has ample acquisition fire-power to buy a place in the new communications arena that Google and Microsoft have rightly concluded is the heart of the new-generation internet.

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