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Cisco’s Collaboration Segment: TelePresence Sales Drive Its Growth


May. 21 2015, Updated 11:06 a.m. ET

WebEx experienced strong growth

In the last parts of this series, we’ve been discussing some of Cisco’s (CSCO) growth areas including its businesses—Data Center, Security, and Wireless. One of Cisco’s other important businesses is the Collaboration business. The Collaboration segment includes products like enterprise content management, enterprise voice, enterprise email, and enterprise social networks.

Cisco’s Collaboration business managed YoY (year-over-year) revenue growth of 9% in fiscal 3Q15. The above chart shows that the revenue growth from Cisco’s collaboration business was negative in the prior quarters, but it turned positive in the last two quarters.

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During the fiscal 3Q15 earnings conference call, Cisco’s management mentioned that TelePresence—its video conferencing business—is driving the growth of its Collaboration business. Cisco also mentioned that revenue from the TelePresence business was up 19% and unit orders were up 66% on a YoY basis. Cisco’s strategy of lowering the prices of its TelePresence solution led to increased demand from its customers.

In particular, its flagship WebEx product is the web and video conferencing application. It experienced 28% growth in terms of billable users.

Cisco widens its lead over Microsoft

Cisco and Microsoft (MSFT) have consistently taken the top two positions in the enterprise collaboration market. However, in calendar 4Q14, Cisco widened its market share gap with Microsoft. According to a report from Synergy Research Group, Cisco’s share in this market was 16% as of calendar 4Q14. Microsoft was second with a 13% market share, while Avaya, IBM (IBM), and Polycom (PLCM) were the three smaller players in this market.

If you’re bullish about Cisco, you can invest in the Technology SPDR ETF (XLK). XLK invests 3.6% of its holdings in Cisco.


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