INNOBLOG

Congratulations to WebEx and its shareholders Cisco announced yesterday that it is buying the company, the leading online meeting service provider, for $3.2 billion. This is yet another indication of the value inherent in disruptive innovation. WebEx is in many ways a classic new market disruptor. It democratized and decentralized a critical function remote business communication and in so doing enabled loads of new consumption. WebEx's online applications empower nonconsumers, enabling small and medium-sized businesses that could not otherwise afford remote collaboration systems to hold meetings on the web, and also make online collaboration so simple that they unlock nonconsuming occasions as well. Instead of having to decide whether or not to fly people in for meetings from disparate locations, companies can now simply rely on WebEx. Meanwhile, WebEx marched to market dominance (it controls some 64% of the space, serving 2.2 million customers at 28,000 companies in 85 countries worldwide) via a disruptive path. Its core technology is less sophisticated and in many ways less good than competing products like video conferencing. But WebEx simplified complex operations it was the first to make it easy to display files across formats, for example and therefore became the application of choice. Meanwhile, kudos to Cisco, which has an impressive track record of buying and developing disruptive businesses. It seems to have a rare talent for knowing when to integrate acquisitions and when to keep them separate and relatively autonomous (Ciscos acquisition of wireless home networking pioneer Linksys, for example, is a textbook example of an incumbent mitigating a disruptive threat while tapping into new growth by buying and leaving separate the would-be-disruptor). It will be interesting to see how closely Cisco integrates WebEx with its high-end online collaboration offering, TelePresence. Given Ciscos track record, Microsoft (LiveMeeting) and Citrix (GoToMeeting) had better watch out