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Cisco to Buy Unified Communications Vendor BroadSoft for $1.9B

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Cisco to Buy Unified Communications Vendor BroadSoft for $1.9B

October 23, 2017
By Paula Bernier
Executive Editor, TMC

In its ongoing push to expand beyond selling boxes, Cisco (News - Alert) today announced a plan to buy BroadSoft for $55 a share, or $1.9 billion. The deal is expected to close in the first quarter of 2018.

BroadSoft (News - Alert) sells unified communications solutions for business customers, and the company has been especially successful with microbusinesses and SMBs, Mark Straton, vice president of product marketing and influencer relations, told me today at BroadSoft Connections in Arizona.

Service providers such as AT&T sell BroadSoft-powered services. IHS (News - Alert) Markit in January 2017 named BroadSoft the global unified communications as a service platform leader, with 38 percent of the total worldwide UCaaS seats running on its platform.

Michael Tessler, BroadSoft’s president and CEO, in his BroadSoft Connections keynote this morning said the Cisco acquisition is great news for all of BroadSoft’s service provider customers: “This will really help you guys compete in the marketplace.”

Of course, Cisco already offers an array of unified communications solutions, like HCS. But, the BroadSoft deal will give it another proven, popular UC platform – and one that is more scalable on the low end, yet still suitable for large deployments.

“Together, Cisco and BroadSoft will deliver a robust suite of collaboration capabilities across every market segment,” said Rowan Trollope, senior vice president and general manager of Cisco's Applications Business Group. “We believe that our combined offers, from Cisco’s collaboration technology for enterprises to BroadSoft’s suite for SMBs delivered through service providers, will give customers more choice and flexibility.”

Trollope, who joined Tessler during his morning address, said the plan is to bring a complete end-to-end stack to its customers, and to do it in a global way. That, he added, is an enormous opportunity. He also said that Cisco is committed to continue the CSP (News - Alert) go-to-market business model, and to support the open platform and handset choice.

This deal is clearly part of Cisco’s larger move to build revenues outside its traditional switching and routing business. Networking is going through a lot of changes in light of the rise of software-centric and virtualized networks. Suppliers with open networking and white box solutions are challenging Cisco, as are Cisco’s communications services provider customers, who have said that avoiding vendor lock-in is a key goal as they embrance SDN and NFV.

Straton said this deal is not about bundling Cisco network equipment with UC offers. But, he did say, in addition to the more expansive UC solution set Cisco gets out of the deal, BroadSoft’s CSP relationships will add value to what Cisco offers on the UC side. However, he noted, Cisco already has a sophisticated CSP program in place.

The BroadSoft deal is Cisco’s second big acquisition of the year. In January, Cisco announced the acquisition of application performance monitoring startup AppDynamics for $3.7 billion. That was Cisco’s largest acquisition since 2013, when it spent $2.7 billion on Sourcefire.

Cisco bought AppDynamics to help it provide end-to-end visibility and intelligence from the network through to the application. San Francisco-based AppDynamics came with about 2,000 customers. That included Directv, ExactTarget, NASDAQ, Progressive, TESCO, and UBS.

“Applications have become the lifeblood of a company’s success. Keeping those apps running and performing well has never been more important,” Trollope said in announcing the AppDynamics deal. 

Edited by Erik Linask

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