CSCO Cisco Systems Inc

By Angus Loten 

Cisco Systems Inc. is turning to smart software in a bid to ward off a number of fast-growing rivals challenging its lead in the enterprise-collaboration market, which helps employees within an organization communicate with chat, videoconferencing and other tools.

Amy Chang, senior vice president of Cisco's collaboration technology group, said a new generation of digital capabilities is transforming enterprise collaboration, citing the impact of cloud computing and machine learning, among other emerging tools.

That is forcing the more than 30-year-old tech company to think like "a giant startup," Ms. Chang said: "We have to behave that way or we will not be in the market a decade from now," she told CIO Journal.

A former global head of product at Google Analytics, Ms. Chang was tapped to lead Cisco's collaboration business last May, when it acquired her relationship-intelligence venture, Accompany, for $270 million.

At Accompany, Ms. Chang and a small team of former Google engineers and developers built algorithms with machine-learning capabilities to automate the process of creating information-rich personal profiles by scouring countless public online sources.

She is now putting those capabilities to work at Cisco, in a bid to upgrade its enterprise collaboration tool, known as Webex. That includes an initiative in the past year to couple facial-recognition technology with auto-generated personal profiles, enabling users to identify meeting participants -- from present job titles, to past work experience, expertise or off-duty hobbies, like golfing, bowling or line dancing.

"I think of this as an enterprise LinkedIn," she said, "It lets me know who I am talking to and what is their expertise."

Webex currently boasts 130 million meeting attendees every month, and more than 360 million meetings hosted each year, including 95% of Fortune 500 firms, the company said.

The global market for enterprise collaboration is estimated to have grown 11.8% last year to $2.4 billion, and is on pace to reach $3.2 billion by 2021, according to International Data Corp.

Wayne Kurtzman, an IDC research director for social and collaboration, said market growth is now being fueled by office workers and other professionals expecting the same capabilities in the workplace that they get on social media when sharing photos, buying products or videoconferencing with friends and family on personal mobile devices.

The focus on boosting Webex with new artificial intelligence-powered services is part of a broader strategy at Cisco to build revenue on recurring software sales, and move away from one-time hardware sales.

There are signs the strategy is working. Cisco in February reported a fiscal second-quarter profit of $2.82 billion, with revenue rising 4.7% to $12.45 billion. While revenue from its core business of selling switches, routers and other networking equipment to companies rose 6% to $7.13 billion, its applications business, which includes videoconferencing and other products, grew 24% to $1.47 billion.

Chuck Robbins, the company's chairman and chief executive, said the gains were the result of a strategy to "aggressively transitioning to a software model and accelerating our pace of innovation."

Some analysts are less convinced, calling Cisco's software push a case of too little, too late: "One of Cisco's challenges is that Slack and Microsoft (with Teams) are redefining enterprise messaging faster than Cisco has been able to respond with Webex," said Larry Cannell, research director at Gartner Inc. for technical professionals, collaboration and content strategies service.

Teams, Microsoft Corp.'s two-year-old collaboration tool, has benefited from the tech giant's strength in both the cloud and desktop software markets, according to tech industry analysts.

Microsoft last month said more than 500,000 organizations are using the tool for workplace chat, messaging and meetings, including 91 Fortune 100 companies. It recently rolled out added features, including customized backgrounds for videoconferencing, live captions for meetings and a broadcast feature for up to 10,000 viewers.

Cisco's other fast-growing rivals in the collaboration market include Slack Technologies Inc., which launched in 2013. In the past year, Slack has grown 50% to 10 million daily active users, including 65 Fortune 100 firms and 85,000 paying customers, offering meetings and messaging tools, while position itself as a central hub with a directory of more than 1,500 apps, the company says.

Facebook Inc.'s Workplace, another competitor that entered the collaboration market in late 2016, currently has some two million paid users, including more than 150 companies with over 10,000 users each, the company said.

As for adding facial recognition to Cisco's Webex, Gartner's Mr. Cannell sees limited value.

"Using facial recognition is a video-centric approach that hardly applies to collaborative scenarios where participants already know each other," Mr. Cannell said. "So, no, I don't think facial recognition will necessarily help Cisco compete with Slack and Microsoft Teams."

Ms. Chang said Webex may not have impressive growth rates, but only because its total number of users is so large. As a result, she said, adding a few million new users appears only as a small percentage growth.

"Last year we grew an entire Slack in 10 months," Ms. Chang said.

Write to Angus Loten at angus.loten@wsj.com

(END) Dow Jones Newswires

April 15, 2019 20:03 ET (00:03 GMT)

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