Oct 23, 2017
Cisco scoops up BroadSoft for $1.9 billion to boost communications tools portfolio
One thing is clear, Cisco is not afraid to use its considerable cash on hand to fill in holes in its product portfolio. Today it wrote out a big fat check for $1.9 billion to acquire BroadSoft, a Maryland company that delivers unified communications via service providers.
The purchase gives Cisco a new way to sell its communications tools as it shifts its focus from a pure networking hardware company to one focused on software and services delivered in the cloud. Today's announcement comes on the heels of an announcement last week that it intended to purchase Perspica and fold the engineering team into AppDynamics, a company it purchased earlier this year for $3.7 billion. If you're thinking, this is an acquisitive company, you're right. It just purchased its 200th company.
While last week's purchase was focused on data and machine learning, and understanding how performance affects the overall business, today's is firmly focused on Cisco's collaboration side of the house, which includes WebEx and Spark. Cisco might not be the first company you think of when it comes to collaboration, especially with Slack, Microsoft, Google and Facebook all in on this lucrative enterprise market, but it is one that the company has been looking at going back to the Enterprise 2.0 days back in 2006.
It's easy to forget now, but Cisco bought WebEx back in 2007 for $3.2 billion to jumpstart its position in the enterprise collaboration and communications market. Over the years, it has been building on that, but WebEx remains a key piece in its enterprise communications strategy.
In many ways, today's announcement is a continuation of that purchase a decade ago. In fact, BroadSoft released its own team communications tool, Team-One, just about a year ago, giving Cisco that tool and the rest of BroadSoft's extensive communications catalog.
Rob Salvagno, VP of corporate business development at Cisco wrote in a company blog post announcing the deal, that the two companies really complement one another. "Collaboration is the first step to business digitization and BroadSoft has partnerships with over 450 telecom carriers in 80 countries — including 25 of the top 30 globally — to 19+ million BroadSoft business subscribers. BroadSoft's portfolio is complementary to our existing on premises and enterprise-centric Hosted Collaboration Solutions (HCS), as well as Cisco's overall cloud investment strategy," Salvagno wrote.
Alan Pelz-Sharpe, an analyst who is founder at Deep-Analysis, a firm that tracks collaboration tools says it should be a good match. "Broadsoft is a nice fit for Cisco as its products and strategy targets SME's whereas Cisco targeted enterprises. Together they cover a much bigger addressable market and looks like a pretty sensible matchup," Pelz-Sharpe said.
Alan Lepofsky, an analyst at Constellation Research, who covers collaboration tools, says the key is how they position the new tools from BroadSoft, but there are questions about how they'll fold the BroadSoft tools into Cisco. " We'll be waiting to see if they migrate the best features of TeamOne (which is essentially the evolution of Intellinote) to Spark, or keep them as different solutions for different size organizations. Spark is built on a highly secure architecture where each action is encrypted, so will that be compatible? TeamOne has also been sold via the BroadSoft channel, so those partners will have to be brought into the Cisco partner ecosystem," Lepofsky explained.
BroadSoft was founded in 1998 and went public in 2010 after raising over $77 million. The deal is expected to close during Cisco's first quarter calendar year in 2018.
by Ron Miller