WebEx and the Extended Enterprise Trend

One company that has really taken advantage of the opportunities presented by the Extended Enterprise is WebEx Communications (WEBX). It provides web conferencing, file/application/desktop sharing, and a host of other online collaboration services, which facilitate applications such as telesales, support, eLearning, etc. They do an especially good job in managing collaboration with colleagues outside the firewall, which, per the Extended Enterprise trends, is just about everyone right now as the outsourcing trends continue in full force.

The stock has done very well, especially in the last year, and has succeeded in coming out of the shadow of Microsoft’s (MSFT) acquisition of Placeware, their competitor.

I have to say that I am surprised that neither Microsoft, nor the other big players like SAP, IBM (IBM), Oracle (ORCL), or Cisco (CSCO) has entered this space in a meaningful way, either by acquiring Webex or by building something of their own.

Adobe’s (ADBE) Breeze is the second most popular product in this segment, and SAP (SAP) and Adobe have partnered to bring Breeze (acquired via the Macromedia deal, now being rebranded Adobe Connect) into SAP’s installbase. One of the problems I see with this strategy is that the web conferencing service is more akin to a telecom service, and not in Adobe’s sweetspot, so if demand really scales it may be difficult for Adobe to scale with it. It may be a much better idea for Adobe to sell their Breeze business to SAP and an equally good one for SAP to buy it from them.

Will Webex remain independent till the end? With a $2.2 Billion market cap, it may not. The likely acquirers, at this point, would be Oracle, Cisco, and IBM.