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Cisco UCaaS gets more complicated with BroadSoft buy

After the BroadSoft acquisition, Cisco UCaaS will have overlapping products that will need sorting and services that could cause conflict with service providers.

After it completes the $1.9 billion acquisition of BroadSoft, Cisco will have to sort through many overlapping...

products to deliver a cohesive UCaaS portfolio.

This week, Cisco announced plans to acquire BroadSoft in the first quarter of 2018. BroadSoft would bring to Cisco a unified communications as a service (UCaaS) platform licensed to many large service providers. The latter then sell the service to mostly small and medium-sized businesses.

Once Cisco completes the acquisition, it will control two products, BroadWorks and BroadCloud, that duplicate what the company delivers through Spark, WebEx, Unified Communications Manager and a UCaaS product called Hosted Collaboration Solution. Like the BroadSoft products, Cisco UCaaS provides voice calling, video conferencing, team collaboration and UC features for contact centers.

The duplication within the combined portfolios creates uncertainty over which products will survive, which makes users nervous.

"The big question is whether Cisco continues to maintain separate platforms -- even if there's some competition between them -- harmonizes the product line down the road, or develops integrations that would, for example, allow a service provider using BroadWorks or BroadCloud to integrate with Spark," said Irwin Lazar, an analyst at Nemertes Research, based in Mokena, Ill.

Cisco downplays product overlap

Cisco has said the product overlap isn't a problem because BroadSoft serves mostly SMBs, while Cisco focuses on large and medium-sized enterprises. Cisco, however, will have to merge those technologies to meet its goal of creating a "full-stack cloud collaboration offer to the entire market."

During a conference call with financial analysts, Rowan Trollope, the general manager of Cisco's internet of things and applications group, said some integrations are likely. They include using BroadSoft's cloud-based PBX across Cisco's UCaaS products, including Spark.

"Ultimately, what we will deliver to the market is a single, cloud-calling capability," Trollope said.

Also, Cisco is likely to integrate WebEx, the company's video conferencing software for online meetings, with BroadSoft products, Trollope said.

Cisco UCaaS faces service provider dilemma

Along with cleaning up a messy joint portfolio, Cisco will have to devise a strategy for selling UCaaS to enterprises without competing with BroadSoft's service providers. Cisco has said it wants to help BroadSoft customers reach larger companies.

How Cisco will avoid competing with service providers is not clear, but the company insists it can keep everyone happy. "We're not intending to compete directly with our service providers, but to broaden the offerings that we bring to that channel," Trollope said.

While Cisco navigates touchy BroadSoft customers, smaller competitors without that headache are sure to add competitive pressure in the SMB market. Those UCaaS providers include 8x8 Inc., RingCentral Inc. and Vonage.

Meanwhile, Cisco's biggest competitor, Microsoft, will continue building out Teams, which the company is developing into its flagship UCaaS offering within Office 365, the cloud-based suite of workplace applications.

Office 365 has 100 million monthly commercial users who have the option of turning on Teams at any time. BroadSoft's UCaaS platform has 19 million business users.

As a technology, UCaaS has matured to the point where it has capabilities that exceed on-premises UC, according to Gartner. As a result, enterprises are starting to move more communications to the cloud.

The UCaaS market is growing 29% annually, according to Synergy Research Group, based in Reno, Nev. In its latest report, Synergy said the market is generating more than $400 million per quarter and will soon reach $2 billion in revenue annually.

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