Networking giant Cisco announced this morning that it is acquiring WebEx for $3.2 billion in cash, the largest purchase by Cisco in more than a year and an enormous deal by Web standards. But why did Cisco do it? WebEx, which dominates the online conferencing business, is more end-user and application-focused than Cisco, whose strengths have traditionally been in providing infrastructure.
Since Cisco routers undergird the architecture of the Net, it's already got Internet cred in spades, if not the South-of-Market cachet to go with it. And WebEx isn't exactly a sexy, Web 2.0-style startup -- it's a mature business that makes most of its money selling to businesses who need conferencing systems for their weekly meetings and sales pitches. Our guess? Cisco is buying WebEx for the same reason it makes all its acquisitions: Because it can. WebEx's revenue is a measly 1% of Cisco's and profits are even smaller relative to its new corporate parent. The best thing Cisco can do with its new subsidiary is leave it alone.
