In mid-March, Cisco Systems jumped into the web conferencing market by buying WebEx Communications for $3.2bn deal. Six months later, WebEx chief executive Subrah Iyar answers the key questions.
Q. The web conferencing industry has seen some major consolidation, with Google buying Marratech in April, IBM buying WebDialogs last month and Adobe entering the market a couple of years ago via its Macromedia buy. Do you expect there will be more consolidation?
A. Well, people have been buying into the market for some time and the reality is the actual business share has not changed. Since about four or five years ago, our market share was 65% plus, Microsoft’s was around 20% and Citrix is lower than that. And that has not changed. None of our competitors have made any significant inroads at all and I don’t see that changing.
Many people don’t understand that web conferencing, while it has the element of looking straightforward and simple; underneath the covers it is extremely difficult to deliver a service that has global usage on a consistent basis.
And you find that while there are sort of simple solutions that have a good demo, in reality they’re not business grade. It’s just like the phone service: appears simple but it has taken a long time for the phone industry to deliver highly available, high-quality service.
So if you really look at who’s really winning in the market and what has changed, nothing has changed. Adobe’s market share is still insignificant. WebDialogs’ is insignificant.
Q. So what’s the biggest technical challenge of web conferencing?
A. Providing a real-time service, with a 200-millisecond response time worldwide, for multi party, multimedia sessions requires an intelligent global network. So let’s say there are five people in a meeting, sharing data, voice and video. We’re talking about multiple channels of real-time information each requiring optimization and synchronization. It is incredibly difficult to deliver real-time multimedia communications over the Internet, a fundamentally non-real time network. You’d agree that when you search on Yahoo or Google, search results take different times. Now let’s multiply that by five end-points each with multiple real-time channels — audio, video and data — a new session starting every second of the day and then delivering that content with a 200-milliseond response time worldwide. That’s web collaboration
Multi-point, multimedia multi-channel communications with real time end-to-end performance: that’s a very hard problem. The internet was not built for real time, it was built for store and forward delivery of content and pages. Like email is not real time. So I can create a simple version, and it may work sometimes and sometimes it won’t. Over time, that’s unacceptable for business people.
Q. But isn’t it just a matter of time before the R&D investments of your deep-pocketed competitors catch up?
A. If money was the only thing, then Microsoft would dominate every market. Nobody has come into this market that has more money than Microsoft…So it is about know-how.
Plus, under Cisco we have all the investment we can build to enhance [our business]. I don’t want to sound arrogant; you always have to be alert in the business. But I think the real time problem has always been underestimated by people.
Q. WebEx competitors typically offer better pricing rather than better features. Is this something that you’re looking to change?
A. Competitors offer lower prices, but what they’re not really saying to you is they can’t compete on service and on features. They can’t compete on dependability and reliably so what they wind up doing is going into the market trying compete on price. Then try to package their service by saying we don’t have all the features, but we are a few dollars cheaper. We offer competitive pricing with both WebEx Meeting Center and WebEx MeetMeNow but the reality is we win customers with the quality of our service.
Look at the history in the space: it has been 10 years since we launched our service and there has been no shortage of people that have tried to compete by being simply cheaper.
Q. What internal changes have there been at WebEx since it was acquired by Cisco?
A. Nothing significant. Our immediate focus is how we can leverage the capabilities of Cisco, particularly its presence through the channel and service providers, its enterprise access and brand. Longer term, there are a lot of initiatives around creating a richer platform for unified communications and collaboration. You will find us integrating with [Cisco’s] Call Manager and some of those capabilities.
On the channel side, it is working with third parties that Cisco has a strong relationship with. In the context of the sales organization, it is driving enterprise presence, where there’s lots of opportunity, and globally there’s lot of opportunities as well.
Q. Is there talk of Cisco offering discounts to its customers not using WebEx to switch?
A. We always have volume discounts. There’s no specific discount drive. Contrary to what the perception is out there, it is not a discount-driven market. The enticement is awareness and integration. Discount is being driven by wannabe players during the past five years, which are not really adding any traction to he market.
Q. What’s new that’s on the horizon for enterprise customers of WebEx?
A. In broad strokes, you will find us doing a lot more around WebEx Connect. WebEx Connect expands our web collaboration capabilities with online work spaces but also provides the framework to deliver other on-demand business process applications in the context of collaboration. So you will see us adding platform capabilities around WebEx Connect. It is going to get more and more momentum in the months ahead and we will announce new partnerships — particularly now we are part of Cisco, there are a lot of third-party companies that want to partner with us around Connect.
We’ve seen the web conferencing concept move to collaboration in the past several years, and the next step is making web collaboration the single point at which we deliver not only collaboration but also other SaaS [software service as a service] applications. We want to provide that framework. The market is evolving from delivering web collaboration services to delivering what is around web collaboration capabilities. We are taking evolving from web collaboration and SaaS platform. So, web collaboration becomes the network capabilities and SaaS is the delivery platform.