03:14 AM

3.15.07 Cisco buys WebEx

The purchase price is about $3.2 billion, according to the press release.

WebEx is a market leader in on-demand collaboration applications, and its network-based solution for delivering business-to-business collaboration extends Cisco's vision for Unified Communications, particularly within the Small to Medium Business (SMB) segment.

"As collaboration in the workplace becomes increasingly important, companies are looking for rich communications tools to help them work more effectively and efficiently," said Charles H. Giancarlo, Chief Development Officer at Cisco. "The combination of Cisco and WebEx will deliver compelling solutions accelerating this next wave of business communications.

Cisco believes the network is a platform for all forms of communications and collaboration, and WebEx's technology and services portfolio complement Cisco's leadership in the Unified Communications and collaboration market, while providing Cisco with a new and unique business model to expand its presence in the fast-growing SMB market," Giancarlo continued.

Om Malik says the buy is part of a strategy to compete head to head with Microsoft in SMB services.

For the price of two YouTubes, Cisco just bought a company that had sales of $380 million, and a net income of around $47 million. The move, a smart one, is actually part of a bigger chess game the company is playing against Microsoft.

Microsoft with its communications efforts is increasingly competing with Cisco in the VoIP business. The two companies will continue to butt heads as the worlds of computing and communication collide and become COMMputing.