By Jim Lundy
(Aragon Research) – Today, Cisco announced it is buying UCC provider BroadSoft for roughly U.S. $1.9 Billion. There are multiple reasons for this move, and while some of them are defensive, that’s not a bad thing.
Currently, we’re in the middle of a massive consolidation in the combined UCC markets—something we have been predicting for years. This blog analyzes Cisco’s move to acquire BroadSoft due to the competition from Amazon, Zoom, and Microsoft Teams.
Cisco buys BroadSoft: The Defensive Angle Against Amazon
In the UCC market, it isn’t just about the battle between Cisco and Microsoft. A previously unheard of player—Amazon— is making a big play and shaking things up. While we don’t know all the vendors who were in the bidding for BroadSoft, we think one of the main reasons that Cisco is buying one of the leading providers of UCaaS is to prevent competitors from doing so, and Amazon may have been a big contender in this fight. It made some bold moves in UCC earlier this year with the announcement of Amazon Chime and its Contact Center. BroadSoft would have been a perfect buy for Amazon, but there are others that may be a good fit, too.
Cisco buys BroadSoft: The Defensive Angle Against Zoom
Zoom may not be viewed as a looming competitor by Cisco, but it should. Zoom was founded by former WebEx employees who built a new brand with a product that is essentially the same as Webex Meetings. Large enterprises want more than just meetings and with BroadSoft, Cisco Spark immediately becomes a broader platform.
In the Cloud, Cisco can now compete more strongly in UCaaS. Zoom is still growing, but it is really Web and Video Conferencing. So from a pure UCC perspective, by adding a full UCaaS offering, Cisco’s total addressable market just grew.
Cisco buys BroadSoft: The Competition Against Microsoft Teams
Let’s be clear: the competition that Cisco faces is not the traditional UC providers, it’s Microsoft Teams, formerly known as Skype for Business. Microsoft bought Skype in May 2011 and with that move, became a UCC provider. Cisco has been working hard to make its large portfolio of UCC applications more unified. That story is now called Cisco Spark and it is an evolving story that will now get even better with BroadSoft.
To date, much of the focus of Cisco Spark has been on Hybrid Calling offers. BroadSoft is all about the Cloud and that means it helps Cisco to be better positioned agains Microsoft Teams—which is all Cloud, all the time. By acquiring BroadSoft, Cisco also receives its customers and resellers. More on the Broadsoft Channel later.
The UCC Market Is About Cloud All the Way
The UCC Market is in the midst of a massive consolidation. Voice is a large market and there aren’t that many players who are doing Cloud well. Our take is that providers like RingCentral and 8×8 are ones to watch. For now, there will be lots of implications for both BroadSoft customers and for the BroadSoft Channel.
The good news is that Cisco is fairly good at both. We will be doing more analysis of this deal as more details come forward but the bottom line is that there will be more consolidation in UCC and it will be harder for smaller players to compete in offering a full UCC Portfolio. What is the next merger area we expect to see? Well, let’s just say that we expect someone to buy Slack by the end of 2018. Developing.