Cisco Gets Conversant with Microsoft Office via Versly ...

Intelligence Report: Cisco Gets Conversant with Microsoft Office via Versly Acquisition
Report Date:
An a lys t: August 31, 2011
Se rvice : Shimmin, Brad
Ma rke t: Hot Topics , Business Technology and Softw are
Cloud Services , Unified Communications & Collaboration , Collaboration Platforms
Quick Take

Competitive Positives
• Infusion of much needed stability and forw ard momentum
• Highlights unity of a combined portfolio of Cisco Quad, W ebEx and Jabber
• Architecture applicable to a broader set of content types and sources
• Encompasses the entire collaborative user experience w ithin a single IT framew ork
• Represents an achievable market objective for Cisco
• Acquisition carries a high probability of success

Competitive Concerns
• Limited to desktop-based Microsoft Office documents
• No historical record of success upon w hich to base future expectations
• Cisco w ill still need to alter Quad, W ebEx and Jabber significantly
• Relies heavily upon an area Cisco has noticeably shied aw ay from
• Asynchronous co-editing technology misses real-time collaboration
• Versly beta service w ill be shut dow n

Event Summary

August 29, 2011 - Cisco announced that it has acquired privately-held Versly. Based in San Francisco, Versly integrates collaboration
capabilities via a plug-in into Microsoft Office applications, purporting to simplify the w ay people w ork by enabling more effective
collaboration around content in documents, spreadsheets, presentations and email.

Analytical Summary

Perspective
• Positive on Cisco's announced acquisition of privately held collaboration tools vendor Versly, because this transaction promises a positive
infusion of beneficial technologies and engineering-savvy leadership that w ill help Cisco better recommend its collaboration portfolio,
particularly w ith customers steeped in Microsoft's Office productivity suite.

Vendor Importance
• High to Cisco, because this acquisition reaffirms the vendor's commitment to the enterprise collaboration marketplace - a position that
w as appreciably undermined this spring w hen Cisco closed dow n its cloud-born e-mail service, W ebEx Mail. This acquisition w ill positively
influence a large number of Cisco products in the future (including W ebEx, Jabber and Quad), setting the stage for a more unified product
strategy from Cisco that prioritizes enterprise productivity across both collaboration and communication.

Market Impact
• Low on the enterprise collaboration platform marketplace, because the Versly acquisition does not give Cisco an established customer
base or even a shipping product. It also does not allow Cisco to penetrate new market opportunities. W hile the technologies and delivery

mechanism used by Versly's beta product w ill encourage rapid integration w ith Cisco products, Cisco w ill need to alter Quad, W ebEx and
Jabber significantly to accommodate the paradigm of collaborative document editing. Moreover, the outcome of this integration - the ability
to use Microsoft Office w ithin the context of Cisco products - w ill not create any new market opportunities for Cisco. The outcome is a
portfolio that is simply better equipped to support Microsoft environments.

Competitive Strengths

Competitive Positives
• Cisco's acquisition of Versly immediately breathes some much needed stability and forw ard momentum into Cisco's collaboration portfolio,
countering recent struggles that include the slow ramp-up for the company's social netw orking platform (Cisco Quad), adverse corporate
restructuring and the discontinuation of W ebEx Mail. And because this acquisition is mostly forw ard looking (the primary assets are human
capital and technology), it implicitly affirms Cisco's future commitment to the collaboration market in general, since the vendor clearly sees
as yet unrealized value in the Versly technology.

• Cisco intends to utilize the Versly technology across a number of solutions, including Quad, W ebEx and Jabber. In this w ay, the addition
of Versly w ill do far more than merely document-enable those products. It w ill further bind them together on the back end through a
common set of features. For example, users w ill be able to share and track a document using Quad's activity stream, kick off a W eb
conference or real-time chat from w ithin a document or see w ho's currently editing a document using the Versly technology. This w ill help
Cisco better position its product set as a cohesive unit, rather than disparate products.

• W hile the Versly technology w as originally built to track and manage collaborative changes to documents created in Microsoft Office, it can
also be applied to a broader set of content types and sources. Already the product can capture metadata surrounding e-mail messages (as
w ell as documents attached to those messages) generated by Microsoft Outlook. Cisco intends to expand that capability to other sources
based upon customer demand, adding support for documents types such as Adobe PDFs and productivity solutions such as Google Apps.

• W hile the acquisition of Versly w on't open up any new market vistas, the company's focus on document creation, sharing and co-editing
w ill allow Cisco to better position its collaboration portfolio as being able to address the entire collaborative user experience w ithin a
secure, managed and governable IT framew ork. This w ill elevate Cisco into rarified territory opposite productivity-capable rivals such as
Jive, VMw are, Novell, Oracle, Google and Microsoft.

• The Versly technology represents an achievable market objective for Cisco - integration w ith existing Microsoft desktop users. This is a
healthy approach to the collaboration market for Cisco. Rather than attempting to tackle an already w ell-established market (as w ith
W ebEx Mail), Cisco is w ith this acquisition seeking merely to contextually integrate w ith the dominant solution (Microsoft Office), not
supplant it.

• Cisco's pending acquisition of Versly carries a high probability of success, stemming from the fact that Versly is a very small company (only
ten employees) w ith no shipping product (the Microsoft Office plug-in is currently in beta testing w ith approximately 100 customers). Cisco
w ill therefore not have to integrate sales, marketing, services and support organizations or migrate an established customer base. The
company can therefore focus its efforts on integrating Versly technology w ithin its ow n portfolio - a high rew ard, low risk scenario.

Competitive Weaknesses

Competitive Concerns
• The Versly approach to integrating productivity documents w ithin Cisco's collaboration and communication tools is unfortunately limited to
desktop-based Microsoft Office documents. It leaves out support for cloud-based productivity solutions such as Google Apps and Microsoft's
Office W eb Apps service. And as mentioned above, Versly cannot manage a broad set of file types, including Adobe PDFs, videos and audio
files, but Cisco intends to extend the Versly technology to encompass these areas in the future.

• Because the Versly Office plug-in does not exist as a shipping product, Cisco and its customers have no historical record of success upon
w hich to base future expectations. This increases the possibility that the acquisition could fail economically w hen compared w ith an
acquisition of a proven, know n entity.

• Although the technologies and delivery mechanism used by Versly's beta product w ill encourage rapid integration w ith Cisco products,
Cisco w ill still need to alter Quad, W ebEx and Jabber significantly to accommodate the paradigm of collaborative document editing. Versly is
much more than a feature that can be added as a stand alone entity. Many disparate facets of a product like Quad w ill have to be altered
to incorporate Versly, namely activity streams, communities, forums/blogs/etc., filtering/recommendations, etc. This w ill take time.

• Versly's architecture relies heavily upon a cloud-based, SaaS deployment model using Amazon AW S. Unfortunately, this is an area Cisco
has noticeably shied aw ay from in the past, at least in terms of delivering its ow n SaaS solutions outside of W ebEx. Note, how ever, that
Versly's cloud-centric architecture w ill facilitate its incorporation into W ebEx itself, as Cisco intends initially to move Versly to the Cisco
collaboration Cloud.

• Operating counter to Cisco's position of strength (real-time communications), Versly employs a very asynchronous technology w here
users modify a document locally and then merge changes using Versly's tracking and conflict resolution engine. In this w ay, it is not a
realtime co-editing solution on par w ith rival offerings from Google and Jive (through its OffiSync acquisition).

• W hile Cisco intends to leave the current Versly beta up and running for the next few months, its intentions are to gather feedback that
w ill help it better integrate Versly into its Jabber, W ebEx and Quad. Unfortunately, this means that Cisco w ill not carry the Versly
technology to maturity as a stand-alone service. In essence this w ill strand the 300+ Versly beta testers.

Response & Recommendations

• Cisco should take advantage of Versly's team of w ell-respected executives and engineers to reaffirm and expand its position as a cloud-
aw are and consumer-savvy technology company. For example, Versly's co-founder, Erik Eccles, w orked for Yahoo! w here he focused on
mergers and acquisitions. Such expertise could help Cisco identify further acquisitions w ithin the collaboration space.

• Cisco should position this acquisition as a clear and focused outcome of its earlier decision to back aw ay from W ebEx Mail. Because Versly
collaboration-enables Microsoft Office, this acquisition can be seen as a positive continuation of its decision to back aw ay from competing
directly w ith Microsoft on the desktop. It lets Cisco approach the market from a position of strength, namely its forthcoming ability to
expose Cisco Jabber, W ebEx and Quad w ithin the context of user productivity.

• Because Cisco has not outlined a specific timeframe for how it w ill integrate Versly or how it w ill expand upon its new found technology
and intellectual capital, rivals should position this acquisition as both a knee-jerk reaction to the closure of W ebEx Mail and an impulse
purchase that it has yet to fully digest or understand.

• Rivals should note that true to its w ord, Cisco intends to utilize XMPP as the communications protocol for Versly capabilities. This
represents an important milestone for the company, w hich promised to employ XMPP (w hich it acquired from Jabber in 2008) as a common
architectural element across its portfolio.

• In evaluating future opportunities for Versly technology, Cisco should refrain from opening new vistas of competition w ithin the file
synchronization and sharing marketplace. Such capabilities are important, but Cisco should avoid the risk of creating a new , standalone
service. Instead the company should build such capabilities into its existing toolset (Jabber, Quad and W ebEx).

• Rivals should point out that w hile the acquisition of Versly w ill open new opportunities for Cisco w ithin Microsoft-dominated shops, it w ill
not help Cisco reach customers employing alternative productivity solutions such as Google Apps, VMw are Zimbra, Novell GroupW ise, Oracle
OpenOffice.org (LibreOffice), etc. Because products like Cisco Quad support many of these offerings, the incorporation of Versly w ithin Quad
w ill be uneven, providing a substantially greater level of support for Office documents.

• Jive should call attention to its long history of supporting Microsoft Office documents, pointing out that its recent acquisition of longtime
partner OffiSync, puts it a step ahead of Cisco, since the OfficSync technology is already integrated throughout the Jive Engage platform.
The company should also call attention to its ability to incorporate Google Apps documents into its collaboration platform and conduct real-
time co-editing as a differentiator.

• IBM should take a similar stance in countering this acquisition. The company's social netw orking platform (IBM Connections), for example,
has a long history of supporting Microsoft Office documents, going a step further in incorporating Microsoft Outlook messages and message
attachments. IBM should also call attention to the fact that it can utilize its ow n productivity suite (Lotus Symphony) as an alternative to
Microsoft's hegemony on the desktop.

Buyer Actions

• Existing Versly beta testers should press Cisco to continue the Versly service as a stand-alone offering. Given Cisco's current intention of
continuing the beta service only as a learning platform for its ow n engineering teams, current beta testers that do not intend or need to
adopt Cisco's broader collaboration portfolio should research alternative solutions.

• Potential customers should see this acquisition as a direct validation of Cisco's stated intent to combine synchronous and asynchronous
forms of collaboration and communication w ithin a unified structure that does not require users to dedicate their time to just one user
experience. Versly quite simply w ill allow users to continue w orking as before, w ithin the context of Microsoft Office w hile enjoying the
benefits afforded by Cisco Quad, Jabber and W ebEx.

• Potential Cisco customers w ith substantial investments or interests in cloud-based document productivity and collaboration should note
that w hile Versly does not presently support brow ser-based productivity products, the company has already begun w orking on a W eb-
based, lightw eight plugin for cloud-borne solutions.

• Existing customers should look at this acquisition as a much needed infusion of not just technology but also pure engineering talent.
Versly brings w ith it a number of high profile engineers including a founding member of the original Java team at Sun Microsystems and lead
engineer for Zimbra. Such technical savvy across such disparate practices w ill bring a fresh set of eyes to Cisco's unique go to market
message of converged collaboration and communications.

Analytical Perspective

W e are taking a positive, if cautiously so, stance on Cisco's announced intention to acquire Microsoft Office integration and collaboration
tool vendor, Versly. Though Versly does not possess a shipping product or a monetized customer base, its executive leadership and
differentiated technology w ill give Cisco a much needed infusion of forw ard momentum and future promise for its lately somew hat
beleaguered collaboration portfolio.

W hen Cisco announced the closure of its just emerging, cloud-based email service, W ebEx Mail, earlier this year, it significantly damaged its
perception w ithin the marketplace, undermining its ow n stated objective of prioritizing collaboration w ithin the enterprise. The company
after all invested more than $215 million in acquiring PostPath (upon w hich W ebEx Mail w as based) in 2008 but only offered W ebEx Mail for
a little more than a year, beginning in late 2009. Cisco's reason for closing dow n W ebEx Mail w as justified. The enterprise e-mail
marketplace is extremely mature, supporting only a handful of vendors and dominated by Microsoft Exchange. But Cisco's expensive and
lengthy foray into that space coupled w ith the slow rollout for its enterprise social netw orking platform, Cisco Quad, and corporate
restructuring that coincided w ith the closure of W ebEx Mail allow ed Cisco's competitive set ample opportunity to call into question the
company's ability to compete w ithin the collaboration marketplace effectively.

The acquisition of Versly itself w ill not undo these missteps on its ow n, but it w ill go a long w ay tow ard reasserting Cisco's commitment to
the collaboration market in general and several Cisco products in particular, namely Cisco Quad, W ebEx and Jabber. Because the Versly
acquisition does not bring w ith it an established customer base and a shipping product, Cisco w ill be able to focus its energies on using
Versly technology to bring productivity documents into play w ithin those products. For example, Cisco users w ill be able to co-edit and
collaborate around Office documents using the tenets of social netw orking (event streaming, commenting, tagging, etc.) and even kick off
real-time communications sessions (chat, W eb conferencing, phone call, etc.) w hile w orking w ithin Microsoft Office. Interestingly, because
Versly collaboration-enables Microsoft Office documents in context w ithout attempting to displace Office itself, this acquisition can be
view ed as a positive continuation of its decision to back aw ay from competing directly w ith Microsoft on the desktop.

Still, Cisco has a long w ay to go before it can make good on such promises. The company w ill not be able to simply plug the Versly
technology into its existing products such as Quad. Many facets of Quad such as event streams, communities and profiles w ill need to
change in order to accommodate the metadata associated w ith document ow nership, versioning, merging, etc. More fundamentally, the
Versly technology is currently limited to desktop-based Microsoft Office applications. It does not yet support Microsoft's Office W eb Apps or
other cloud-delivered solutions such as Google Apps. And because Versly's architecture relies heavily upon a cloud-based, SaaS
deployment model using Amazon AW S, this acquisition sends a mixed signal to Cisco's partner ecosystem, since Cisco has decided to go
w ith a partner-led strategy for cloud delivery of select products such as Cisco Quad.

All m aterials Copyright 1997-2011 Current Analysis, Inc. Reproduction prohibited without ex press written consent. Current Analysis logos are tradem ark s of Current
Analysis, Inc. The inform ation and opinions contained herein have been based on inform ation obtained from sources believed to be reliable, but such accuracy cannot be
guaranteed. All views and analysis ex pressed are the opinions of Current Analysis and all opinions ex pressed are subject to change without notice. Current Analysis does
not m ak e any financial or legal recom m endations associated with any of its services, inform ation, or analysis and reserves the right to change its opinions, analysis, and
recom m endations at any tim e based on new inform ation or revised analysis.

Current Analysis, Inc.
21335 Signal Hill Plaza, Second Floor, Sterling, VA 20164
Tel: 877-787-8947
Fax : +1 (703) 404-9300

Current Analysis, Inc.
2 rue Troyon, 92316 Sevres Cedex , Paris, France
Tel: +33 (1) 41 14 83 17

h ttp ://www.cu rre n ta n a lys is .co m