Cisco and Broadsoft: What Does It Mean

Cisco and Broadsoft: What Does It Mean

Earlier this week Cisco made an acquisition, buying telecom infrastructure provider Broadsoft for 1.9 billion dollars, net cash. To many in the telecom world it was a merger of sorts, not so much of equals, but of parts and pieces.

Cisco, long a force in the collaboration world, and the SIP based telecom hardware world is long on telecom related assets and services. WebEx, Call Center and now Spark, are all core elements of Cisco’s telecom offering. For years, communications service providers like telcos have been working with Cisco to integrate phone and collaboration services into their customer’s offices around the world.

Broadsoft, has been doing the same, but of late was moving to a more cloud like approach with Broadcloud, something that Cisco was also doing. The difference is that Broadsoft already has some 600 CSP’s, including many wireless carriers.

The marriage is one not only of opportunity, but also necessity. The traditional CSP’s, the local and national telcos, are being challenged daily on a variety of front. Microsoft’s Skype for Business is already being sold by those same telcos, eating away at market share of both Cisco and Broadsoft. Companies like 8x8, Vonage Business and Dialpad with even more modern cloud approaches are steadily eating away at the traditional telcos business, and in turn pulling customers away from Cisco and Broadsoft deployments.

Then there’s the economics of the deal. At $1.9 billion and with 600 customers of note, the back of the napkin math assigns a value of $30 million dollars per CSP. Compare that to Skype being acquired for $9 billion or WhatsApp for $19 billion, and you quickly realize that Cisco is looking at the long term multiple if they can take Broadsoft and their own service and have it work in webscale, not telco scale metrics.

Time will tell if Cisco found a diamond, but before it shines, there’s a lot of internal work to be done, and the market won’t see the benefits for at least two years.

 

Andy Abramson is Xceptional's Marketing Consultant, long time VoIP industry watcher, and author of VoIPWatch.