WebEx the maker of popular online collaboration enterprise software is being acquired by Cisco for $ 3.2 billion. With Cisco's enterprise reach, the acquisition seems to make sense. Cisco has mainly been in the router and switches market. WebEx's communication software seems to be good fit in Cisco's "Unified Communications" play. This should put Adobe's Enterprise Communications plans in a slightly difficult position.
In the Enterprise space Adobe has been trying to piggyback upon its Acrobat offerring into wider Enterprise solutions. Microsoft ofcourse is the 3rd main player in this field. So competing with two strong enterprise players for Adobe wouldn't be comfortable.
When Adobe acquired Macromedia, it was happy to get Macromedia's Breeze Web Conferencing besides Flash and Dreamweaver. Adobe went ahead and launched Breeze as Adobe Acrobat Connect. Notice the word "Acrobat" between Adobe and Connect -- everything enterprisy would have Acrobat in its name :)
Acquisition prices get compared and no one has forgotten what Google paid for YouTube before getting hit by copyright claims and a $ 1 billion lawsuit by Viacom. The difference here is that WebEx clocked around $ 380 million in revenue last year and was poised for further growth (WebEx PDF of Investor Preso). WebEx's revenue growth is strong -- from $ 25 million in 2000 to $ 380 million in 2006.
YouTube's price of $ 1.65 billion came-up in CNET's interview WebEx's CEO Subrah Iyar:
CNET: Cisco agreed to pay $3.2 billion for WebEx, about $2.9 billion when you consider the cash you guys already had. That's a lot of money. Google paid $1.6 billion in stock for YouTube. Do you think you're twice as valuable as YouTube?
Iyar: YouTube had no revenue and no business model. And now I hear Google is being sued by everybody.
Cisco plans to close the Acquisition of WebEx by July 2007.
Here is Tim O'Reilly's take on the WebEx acquisition by Cisco.
