It was announced last week that Cisco, the world’s largest networking gear manufacturer, is acquiring telecommunications software company BroadSoft. 4C Strategies is here to look at this acquisition from a unified communications consultant’s perspective and to break down exactly what the acquisition will mean for existing customers of both Cisco and BroadSoft.
The story so far
Cisco announced last week that it was acquiring telecommunications software company BroadSoft for $1.9 billion. In a market already showing significant signs of consolidation, Cisco appears to be following suit and has officially acquired its 200th company. This is the company’s second major acquisition so far this year, following a $3.7 billion acquisition of AppDynamics in March. It is likely that Cisco’s decision to acquire BroadSoft will spur its competitors to make similar moves, thus leading to further consolidation within the market.
A brief history of BroadSoft
BroadSoft is based in Gaithersburg, Maryland. The company provides software and services to mobile, fixed-line and cable service providers, which then enable these providers to offer unified communications, over their internet protocol networks, to their business customers.
BroadSoft has historically sold its products to large telecommunications companies, including Verizon Communications and AT&T, which then go on to resell the software to their own business customers.
According to a research report by Barclays Plc, BroadSoft recently attempted to redevelop its business strategy in order to sell directly to these customers. This move, however, would put the company’s relationships with its existing telecommunications partners under significant risk.
What motivated Cisco to make the acquisition?
Cisco’s traditional business of manufacturing switches and routers has seen significant revenue declines as of late. This has pushed the company, as with other legacy technology firms, to refocus its efforts into high-growth areas such as security, the Internet of Things (IoT) and cloud computing.
In the words of Cisco’s CEO, Chuck Robbins, “This acquisition of BroadSoft actually gives us the most comprehensive set of collaboration solutions for our customers.”
How will it affect the market?
In a market already showing signs of significant consolidation, it is likely that Cisco’s move to acquire BroadSoft will cause a domino effect, leading to further acquisitions by other market players. It is likely that Cisco’s direct and aspiring competitors will be pressed to make a move on the next best target, after BroadSoft, in order to remain in the game.
Customer advice from a Unified Communications Consultant
At such an early stage, it is hard to know what the acquisition will mean for either firm’s market offerings. However, as with any acquisition of this nature, some level of product consolidation will be inevitable, especially in light of the scope for product overlap between existing offerings from each company, namely between the collaboration applications BroadSoft Team-One and Cisco Spark.
Any customers of either Cisco or BroadSoft who wish to know what the acquisition will mean for them would be advised to contact 4C Strategies on 01858 438938, or email email@example.com, and an experienced unified communications consultant will be happy to discuss your options with you.