Opinion

Cisco and Skype are made for each other

I want you to imagine, if you will, the technology news cycle as something a little bit like the Large Hadron Collider, with beams not of protons, but of rumours and hearsay being constantly fired around it.

The watching scientists, of course, are the bloggers and journalists of the world, ever alert for a genuine yet elusive story.

Just such a 'Higgs-Boson' story popped into existence for a brief moment this weekend, when for a brief fraction of a second the journalists thought they saw Cisco buying Skype.

The story, broken by TechCrunch and citing an unknown yet 'reliable' source, suggested that Cisco was prepared to put around $5bn on the table for the assets of the VoIP provider before it completes its IPO.

For a firm like Cisco I think this potential deal has a high probability of success, and let's face it; it certainly makes a hell of a lot more sense than Skype's frankly bizarre pairing with online auction powerhouse eBay. Let's consider why.

First we should look at Skype. It's a successful company with a business model based on low-cast calls and free video-conferencing services that bypass traditional telephone networks but has struggled to make money (although it is now profitable).

Cisco, meanwhile, is a traditional network plumber busily devising a video strategy to take advantage of what it sees as a massive nascent market.

It has already acquired plenty of video technology for itself, buying Flip camera maker Pure Digital in 2009 and Tandberg later in the year.

We also know that CEO John Chambers has vowed to become even more aggressive in the consumer space and it is known that he sees his flagship TelePresence video-conferencing suite as a possible consumer product.

Now, consumer is an area Skype knows well; indeed, I'd go so far as to say it is already synonymous with consumer VoIP technology.

Cisco would be foolish not to make a concerted play in the sector, and I think it's what they want it for. 

But the pot gets sweeter. Skype has also been poking around the enterprise space, and actually launched a business service called Connect 1.0 just yesterday.

The fit between the two companies is obvious in both the business and consumer spheres. Assuming John Chambers gives a toss what I say, I think Skype suits Cisco down to the ground, and I think he should do it.

This was first published in August 2010

Join the conversation Comment

Share
Comments

    Results

    Contribute to the conversation

    All fields are required. Comments will appear at the bottom of the article.