Does Cisco buying Skype make sense?

Does Cisco buying Skype make sense?

Summary: If you ever watched the later seasons of 24, you'll recall that Jack and his buddies at the Counter Terrorist Unit were always using Cisco Telepresence for video-conferencing. That was no surprise. John Chambers, Cisco's CEO, has long thought that Cisco should be thought of as not just the big dog of networking, but of Voice over Internet Protocol (VoIP) and video-conferencing as well.

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I think this is a win-win for both companies.

If you ever watched the later seasons of 24, you'll recall that Jack and his buddies at the Counter Terrorist Unit were always using Cisco Telepresence for video-conferencing. That was no surprise. John Chambers, Cisco's CEO, has long thought that Cisco should be thought of as not just the big dog of networking, but of Voice over Internet Protocol (VoIP) and video-conferencing as well. Alas, while some enterprises bought into this, most people still preferred cheaper, easier solutions like Skype.

Indeed, if you were ask people about VoIP, I have no doubt that, Skype, and not Cisco, would be the first brand to spring to mind. After all, Skype has become almost omnipresent in PC-based VoIP and video-conferencing despite the best efforts of rivals ranging from Cisco to the business video-conferencing vendors such as Polycom and Tandberg to would-be contenders for small-office/home (SOHO) video-conferencing like ooVoo.

Making matters worse, Juniper and Polycom have been invading Cisco's networking hardware/VoIP/teleconferencing turf. And, on top of that, now Google wants in the VoIP business as well with its new Gmail/Google Voice integration package. What's a CEO to do?

I suspect that what Chambers thought was, "If you can't beat them, buy them."

Cisco buyout for Skype makes sense for Skype as well. Skype, despite some efforts such as trying to combine VoIP with private branch exchange (PBX) and Unified Communications systems with Skype Connect, may be popular with people in general, but it's never made much of an impact in the corporate markets. I'm sure Skype's private equity owners would also welcome a buyout more than casting their bread on the uncertain waters of a Skype IPO in this shaky market.

So, there you go. Cisco gets instant brand-name VoIP/video-conferencing recognition throughout the world, Skype owners get cash, and Skype developers should be gainfully employed for the next few years. It sounds like a win-win to me. What do you think?

Topics: Unified Comms, Cisco, Collaboration, Networking, Telcos, Social Enterprise

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12 comments
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  • RE: Does Cisco buying Skype make sense?

    As long as Cisco keeps Skype free for non-business users, this would be a very positive idea.
    jorjitop
  • It depends the big picture...

    It all makes sense if you think as a user. If you look at the complete ecosystem, Cisco will position itself as a competitor to some of its customers like voice operators.<br><br>With pressure coming from HP/Dell/3Com/Juniper/... to beat Cisco, voice operators might be tempted to go with the competition.<br><br>Even Cisco itself was, for instance, a large DELL customer. The day DELL started its switches business, Cisco instantly denied all DELL orders and moved every new order to IBM.<br><br>Whether or not this will be globally positive to Cisco is yes, I think. I prefer to see Cisco selling some stuff to everyone, rather than selling a lot to some customers while being ignored by the rest of the world.
    w00pla
  • RE: Does Cisco buying Skype make sense?

    Sounds great for Skype. I don't buy the argument that Cisco would stand to benefit. I think it would be a big money loser for them as it was for Ebay.

    Ronnie
    http://mailVU.com
    BallantyneGuy
  • RE: Does Cisco buying Skype make sense?

    w00pla is right that Cisco typically avoids becoming a competitor to its biggest customers but there are a lot of positives to be taken from this idea. Any application adding traffic to the network is good for Cisco - even if it's free. Network providers will still have to buy more capacity and that means more hardware dollars for Cisco. Video happens to be very good for this as Chambers has been pointing out for years.

    Also, as a stand-alone business, Skype may not be very attractive but integrating the technology and user base into Cisco's other Collaboration solutions gives them a consumer/SOHO solution that matches their existing corporate packages. Over time they can standardize a lot of the underlying technology while continuing to serve the two markets with different price/packing options.

    I'm not sure they'd do it because of the conflict it creates with SPs, but I can see the argument for considering it.

    Phil

    http://tomsawyer.com
    philgr99
  • RE: Does Cisco buying Skype make sense?

    Does it matter? Gobble, gobble, gobble (the sound of modern capitalism in action).
    klumper
  • Skype == internet calling

    For most people, Skype is synonymous with (video)calling over the internet. Some even know this protocols name is Voice over IP ..
    mad-man
  • RE: Does Cisco buying Skype make sense?

    Makes more sense than the $600m they flushed down the toilet on Flip:-)
    neilpost
  • RE: Does Cisco buying Skype make sense?

    "Cisco gets instant brand-name VoIP/video-conferencing recognition throughout the world, Skype owners get cash, and Skype developers should be gainfully employed for the next few years. It sounds like a win-win to me. What do you think?"

    As Michael Scott might say, that seems like a "win-WIN-win."
    jmwells21
  • as long as the current Skype marketing is retained and Cisco simply

    integrates the service into their routers with added marketing, it's acceptable.

    but if they go making wholesale changes to account structures that current users don't have the stomach for, the move could backfire for both companies.

    if the goal of Cisco is just to gobble and destroy, i will hate them forever.

    :)
    .
    wessonjoe
  • RE: Does Cisco buying Skype make sense?

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