Cisco and Microsoft: Happy ever after?

The recent display of public affection between Cisco and Microsoft will reassure customers, but the tension between competition and collaboration will remain, say analysts.

Both companies dominate their respective markets and have had a loose partnership for around a decade. Now they've said they intend to build on this relationship to work even more closely.

This collaboration will focus on unified communications tech — essentially the convergence of telephony, email, instant messaging and videoconferencing using IP technology.

The two companies have said they will increasingly focus on the interoperability of these unified communications technologies to better meet customer needs.

A joint statement from the pair said the "intersection of networking and software" is at the heart of a "new era" of innovation in communication and collaboration.

But analysts believe the extended relationship could be less significant than the tech giants are making out — and could also prove a tricky balance.

In a statement, Cisco chief executive John Chambers explained: "One of the reasons we are having these discussions is to make clear just how extensive the collaboration between Cisco and Microsoft really is."

He added that Cisco and Microsoft have invested close to $40m (£20m) in their joint work and have more than 140 people working on collaboration around the world.

Microsoft chief executive Steve Ballmer said in a statement: "It might seem counterintuitive that two companies can compete and co-operate at the same time but it is critical to ensure that innovation moves forward without unnecessary delays and disruptions created by technologies that cannot work together."

He added the two companies want to achieve the "best interoperability in the business".

But Jan Dawson, vice president at analyst Ovum, said the announcement is "useful as a statement of intent from both companies about their plans to interoperate", but it didn't go much further than that.

Dawson said it will depend on the behaviour of Cisco and Microsoft salespeople and engineers as to how customers perceive their ability to work together.

The tension between competition and interoperability will remain, Dawson added, and both companies will have to make "tough decisions about where to draw the line between the two".

And Steve Cramoysan, research director at Gartner, said: "To some extent it's something and nothing. It's no real difference to what it was before the statement frankly."

He added: "They're trying to avoid a negative reaction from their customers. It's about making a public statement."

But Cramoysan admitted that neither company can dominate the market and will need to offer customers the right combination of tech. "No one company can do it all," he said.

He added: "They're both coming into this [unified communications] from their respective strongholds. They need to be able to compete but they also need to be able to co-operate in some areas.

"It's another set of big vendors recognising that they need to work together."