On the 23rd of October, Cisco and BroadSoft left the VoIP marketplace in a state of electrified buzz with their announcement that Cisco would be purchasing BroadSoft for $1.9 billion. The acquisition could potentially mean huge things for the future of the market, as BroadSoft allows Cisco to fill gaps in their current portfolio, and potentially take a leading share of the unified communications sector.
I had the opportunity to speak with Matthew Townend, the Director of Research and Consulting for Cavell. Cavell has the benefit of more than a decade of experience following and analysing the VoIP market. Building on a supply-side driven model, Cavell surveys the service provider market once every six months and asks them to provide data on how they’re performing on a confidential basis, to allow for a more comprehensive evaluation of the market.
Tell Us What You Think About the Cisco/BroadSoft Deal
Sitting down with Matt, the first thing I wanted to know is what he, and Cavell overall, thought about Cisco’s decision to purchase BroadSoft. He told me that he believed the choice made a lot of sense when it came to filling out Cisco’s product portfolio.
“For years, Cisco has been building on an “HCS” platform which really only fits the 500+ or 1000+ seat market. Although they’ve tried over the years to bring that down and “multi-tenant” it, they’ve always had something of a problem connecting it with the lower-end of the market. Of course, we all know that traditionally, that’s exactly where BroadSoft have shown their strength. From a logical, product-set point of view, the purchase makes plenty of sense.”
Matt went on to say that BroadSoft is currently in a good position for Cisco to take advantage of the breadth of their service provider portfolio:
“The brand has recently sold into a lot of Tier One customers, which are Cisco’s heartland. In terms of a product which can easily be pushed to maximise relationships with service providers, they’re in the ideal space.”
What About the Overlap Between Cisco/BroadSoft Products?
Cisco recently said that they only want to focus on a single product portfolio. This means that if the BroadSoft/Cisco purchase does take place, then they’re going to need to deal with a few overlapping segments.
“Spark probably isn’t going to go away, but it looks like Cisco are probably going to drop the idea of Spark Voice, and start examining the strengths of BroadSoft and WebEx instead. For instance, Cisco doesn’t have a high-end, cloud-based contact centre product on the market, where BroadSoft clearly does with their CC-One solution.”
Matt also suggested that we shouldn’t be getting too far ahead of ourselves just yet: “This is all based on the deal actually going through. There’s an assumption when a deal is announced that it will take place. However, we all know that that isn’t necessarily case, just look at the Mitel and Polycom merger for instance. There’s also a question of whether the purchase will come under scrutiny from regulatory bodies because it will certainly make Cisco the dominant player in the space.”
Besides the threat of regulatory review and other potential bumps in the road, there’s also the chance that under buyers might come in.
What Do Service Providers Think About the Deal?
Matthew went on to talk about the issues that service providers are currently facing when it comes to the Cisco/BroadSoft purchase. This is something that Cavell will be covering in greater depth in their upcoming webinar, which aims to address the impact of the Cisco acquisition on the Service Provider Community.
“In terms of talking to service providers, their concerns are largely based on the worry of having all their solutions coming from one provider. They liked having Cisco and BroadSoft separate, and they’re worried about the diverse approaches of the two businesses. BroadSoft has always been something of a flexible, commercial organisation, small enough to make deals and changes where necessary, whereas Cisco is more structured.”
Another area worth noting is that the price points for Cisco and BroadSoft are worlds apart too. “I’m sure that the larger telecommunications companies will be able to maximise their buying position with Cisco, but some of the smaller providers might not be able to do the same. Cisco will also need to start thinking about distribution. BroadSoft has a new set of distribution solutions, but Cisco’s options might not fit their model. However, Cisco might see this as a good thing, since they know they need to make changes to distribution too.”
A Logical Purchase, But There Are Question Marks to Think About
According to Matt, and many other professionals in the VoIP space, it appears Cisco’s decision to purchase BroadSoft is a very logical one – particularly from a product point of view. However, there are still some question marks to consider.
“Let’s not say that the deal is done quite yet. There’s a good chance that it is going to happen, but we can’t really count our chickens at this point. The purchase is likely to come under some regulatory scrutiny, which might slow the deal down quite a bit.”
Matthew will be speaking more about the upcoming purchase in their webinar today, and you can join the session to find out how the acquisition could affect you.
