Cisco Sends A Recall On Its Cloud Email Strategy

Infrastructure & operations executives have shown a tremendous interest in looking for opportunities to take advantage of the cloud to provision email and collaboration services to their employees – in fact in a recent Forrester survey, nearly half of IT execs report that they either are interested in or plan on making a move to the cloud for email. Why? It can be more cost effective, increase your flexibility, and help control the historical business and technical challenges of deploying these tools yourself.  

To date, we’ve talked about four core players in the market : Cisco, Google, IBM, and Microsoft. According to a recent blog post, Cisco has chosen to no longer invest in Cisco Mail. Cisco Mail was formerly known as WebEx Mail – and before that, the email platform was the property of PostPath, which Cisco acquired in 2008 with the intention of providing a more complete collaboration stack alongside its successful WebEx services and voice.  I've gathered feedback and worked with my colleagues Ted Schadler, TJ Keitt, and Art Schoeller to synthesize and discuss what this means to Infrastructure & Operations pros and coordinating with their Content & Collaboration colleagues.

 So what happened and what does it mean for I&O professionals? Here’s our take:

  • Cisco underestimated the barriers to entering this market. Cisco ran into the ring where there was a Battle Royale being fought between IBM, Google, and the heavyweight Microsoft. My colleague Ted Schadler and I have spent a lot of time over the last few years focusing on what the impact of the cloud on email and collaboration means for C&C pros charged with creating the information workplace vision, and the I&O pros responsible for running it – and we knew they were in for a tough fight. Cisco’s initial focus was on the SME market where Microsoft has enjoyed significant success and Google was another popular choice. Many customers have existing vendor relationships where there were technical dependencies among collaboration products and pricing incentives to bundle products together – and this made it an extraordinarily steep hill to climb for a newer player in the market. Even having the capability to integrate with Microsoft Outlook to deliver an “Exchange-like” experience couldn’t help overcome that challenge.
  • This signals Cisco’s noncommittal strategy to non-conferencing technologies . . . For your C&C colleagues, this news raises questions about other parts of Cisco’s collaboration portfolio that are not related to web- and videoconferencing. When it purchased WebEx in 2007, Cisco bought a market leader in the space. Likewise, their development of Telepresence and acquisition of Tandberg has put them in prime position to compete in and lead the high-barrier-to-entry videoconferencing space. They have the pieces and the opportunity to do so, from the desktop all the way through to the high-end, hi-definition room-based systems – which, by the way, are connected by Cisco routers and switches. 
  • . . . And customers considering their collaboration tools should proceed with caution . . . Other collaboration tools, like team workspaces, social software platforms, and instant messaging apps, however, are completely different animals. These tools have not reached the commodity status of email, but they are well served by the big players in the collaboration space who have been duking this out for the better part of the 21st century. Cisco acquired Jabber and has been building Quad to compete in these areas, but has yet to deliver like they have for web- and videoconferencing. C&C and I&O pros charged with choosing and implementing these tools should naturally proceed carefully here.
  • . . . But I&O pros evaluating unified communications should not be worried. For I&O pros involved in evaluating their unified communications options, Cisco’s discontinuance of Cisco Mail raises other issues – but doesn’t throw any red flags on the field. Customers considering Cisco Unity Unified Messaging should in parallel explore the option of using Exchange (which was the original message store for Unity) as their message store, or other vendor products such as Avaya Modular Messaging, AVST CallXpress, or Microsoft’s Exchange UM.

 Bottom line: Spending $215M doesn't guarantee you success, but Cisco's anchor tenants of collaboration – WebEx and videoconferencing – will still be important products for Cisco, and you.

 So what’s your reaction? Were you a Cisco Mail customer? If so, I’d love to hear from you.

Comments

A fair and measured analysis,

A fair and measured analysis, nicely rendered. Let's pull back the lens and start by observing how rare it is for businesses to have the discipline to put anything on a "stop doing" list. As an investor I'd like my bets all to win all their bets, but since that's silly, I'd like them all to have the courage not to keep putting chips in a losing pot. Any poker player knows the effect of "just one more chip" mentality--you go home a lot poorer or less rich than you would have if you had the discipline to fold 'em early. Also consider the paradoxical but vital difference between "important to customers" and "strategic to portfolio/architectural strategy). Customers will continue to use email even as it's wide array of sub-optimal use cases (which were better than nothing when email was the only tool in the bag) get replaced by tools designed for the nature of the particular job. It should be interesting to watch something that rarely happens...the genie getting somewhat put back in the bottle. Cisco is justly famous for investing heavily in core (that which drives differentiation) while trying to minimize focus on context (everything else), and having the discipline to define and re-define the divide as dynamics change. Three years ago, e-mail seemed core (a premium opportunity); today, it's clearly context (commoditizing like crazy). Three years ago, Enterprise social software seemed a "well maybe", whereas now it's plainly sizably real. If past is any indication of future behavior, Cisco will invest aggressively to try for a dominant or at least #1/#2 leading market share across the range of Collaboration technologies (inclusive of voice/UC). Care to bet against them? In 10 years from a standing start (zero market share) they overhauled the triad of Siemens, now-defunct Nortel and Avaya to take what is now a commanding lead in enterprise voice (or UC or whatever you want to call it these days). And now it looks like they'll pass Avaya in it's citadel business (contact center) as early as 2012 (Forrester prediction I believe). So absent one or both of two factors, Cisco is in for the long haul in the new categories you cited. Those factors are 1) failure to capture dominant or leading market share organically plus inability to acquire it for the right price as they did w/ WebEx and Tandberg 2) Commoditization prior to attaining lead position (market leaders try to stave off commoditization but they don't need to punt since the pressure is always greater on the weaker players).

Really enjoyed reading this

Really enjoyed reading this blog. There is another area that may be worth exploring- Do Cisco really know how to make money from software applications?

It seems to me that Cisco's UC strategy is akin to going to a fast food resturant- instead of "do you want fries with that?" it's a case of "do you want a device with that?".

Cisco's margins are in devices and hardware. They deconstructed the PBX and re-constructed it on their terms with their servers and their devices. Telepresence- again a great opportunity to upgrade the network and plug in expensive high-end devices full of juicy margin.

Email? well Cisco don't sell PCs (although they may get some limited success with their $800 Cius tablet,) and perhaps the integration problems were underestimated.

With Cisco pushing Quad and social, the timing around Enterprise Connect and whizzy key note demos could not have been better.