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Analyst: BroadSoft Buy is 'Insurance' for Cisco

October 23, 2017

The $1.9 billion that Cisco is paying for BroadSoft sounds like a lot of money. But unified communications analyst Jon Arnold says it’s a small price to pay given what’s at stake.

What’s at stake is the large and growing unified communications market. Global Market Insights Inc. says the UC market will be worth $96 billion by 2023. Grand View Research Inc. says it will be valued at $143.49 billion by 2024.

Cisco and Microsoft are the leaders in this space, according to Arnold, principal at J Arnold & Associates. But Microsoft Teams is gaining momentum while Cisco Spark is not providing the results the company was hoping for, Arnold indicated.

“This is insurance for Cisco,” Arnold said of the company's move to purchase BroadSoft.

In April Synergy Research Group said that Q4 data indicated “collaboration market leader Cisco grew its market share for the third consecutive quarter, passing the 15 percent mark in the final three months of the year. Microsoft too saw a sequential uptick in its market share but remained more than two and a half percentage points behind its big rival.”

But the research firm added that “Cisco’s market share growth in Q4 was thanks in large part to achieving a five-year market share high in premise-based solutions while holding its own in the much higher growth hosted/cloud market segments.”

The cloud is the future, and Cisco’s move to buy BroadSoft may help the company both capture more SMB business and move its UC strategy more toward the cloud.

Arnold said Cisco’s Spark strategy was supposed to move the company into the UC future. But then, he said, the company unveiled Cisco Spark Board, which was a shift back by Cisco to selling hardware.

As for BroadSoft, Arnold said, the company could’ve probably continued successfully on its own going forward. But, he added, there has been a lot of consolidation of UC vendors in the recent past, and this is one more example of that trend. 

Edited by Mandi Nowitz

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