At a glance, Cisco is in good shape, with Q4 earnings up seven percent in a tricky macroenvironment.
However, the results also disclosed a 10 percent revenue drop in the business unit that houses Webex.
Scott Herren, CFO at Cisco, has since suggested that this results from a decline in virtual meetings, presumably in the wake of the “back to office” work trend.
Yet, the growth of Microsoft Teams and RingCentral in the quarter may counter such suggestions.
Webex Finds Itself Stuck Between a Rock and a Hard Place In UC
“Cisco is between the proverbial rock and a hard place,” said Evan Kirstel, Social Media Strategist at BCStrategies, in conversation with UC Today. “The rock being Microsoft and the hard place being Zoom, Google, and about 18 other vendors I can rattle off from the top of my head.”
Indeed, the UC space is an incredibly crowded, mature market. Even when a vendor releases a new differentiative feature, it’s not long until someone catches up.
Slack and Zoom may attest to this with the number of features Microsoft has seemingly poached from them in recent years.
As such, it’s hard to gain and maintain market share – with Teams perhaps the only exception to this rule.
“UC is not quite a race to zero, but it is going to follow the same path VoIP did,” added Jon Arnold, Principal Analyst at J Arnold & Associates.
I don’t think anybody goes into UC to make money now. It is more about holding onto their customer base and selling where you can actually make money.
One of those money-making arenas for Cisco is the contact center, where it has a massive legacy customer base to leverage.
Thankfully, The Webex Contact Center Is Growing
According to Herren, the ten percent decline in Cisco’s collaborations portfolio was offset by the Webex Contact Center growth.
As a cloud-native solution, the platform is receiving positive reviews – with Gartner placing Webex in its Magic Quadrant for the first time in 2022 and Aragon Research naming it a “market leader”.
Unfortunately, Cisco was a little late to react to the shift to CCaaS, which hurt its positioning in the contact center market.
However, now Cisco is aligning the CCaaS platform to its legacy contact center technology and attempting to differentiate through a hybrid offering.
The move may attract enterprise customers and enable further growth, as those businesses may have complex data workloads they want to keep on-premises.
If Webex can package its UCaaS and CPaaS tools with those big spending contact center customers – that may propel its entire collaborations portfolio.
Moreover, beyond the contact center, that packaging strategy may present a significant opportunity for Cisco to bring Webex back to growth.
A New Go-to-Market Is Perhaps the Next-Best Step for Webex
Beyond collaborations alone, Cisco has perhaps the deepest portfolio to support the modern, hybrid workplace than any other vendor.
As such, Zeus Kerravala, Principal Analyst at ZK Research, sees an opportunity for Cisco in doing more to “sell the pallet” of networking, security, and collaboration.
“Now, if Microsoft is throwing Teams in as part of its productivity suite, there is no reason why Cisco can’t throw Webex in as its clients buy more security and networking,” he said.
Such an approach could work well, with its security and networking business experiencing robust growth – the latter especially, with its Secure Agile Networks offerings up 14 percent last quarter.
Indeed, Kerravala believes Cisco has become the de facto standard for networks, which opens the door for Webex. He concluded:
They have to figure that out as a way of playing that hybrid work angle; to pull through Webex without trying to lead with Webex all the time.
Already, this change of tact seems to be in the works. Cisco is increasing its emphasis on hardware – with the Microsoft partnership, as an example – where it positioned that as a core competence.
Perhaps this shows how Cisco is changing its model and using that to pull Webex through.
This and contact center growth are perhaps not enough for Webex in itself. Yet, if Cisco can continue to pull the whole pallet together – as Kerravala suggests – that may well bolster interest in Webex and give the vendor a differentiator its UC competitors can’t replicate.