CSCO and MSFT Plan to Strengthen Collaboration Cloud Capabilities

Products tap benefits of cloud

Last December, Cisco (CSCO) and Microsoft (MSFT) came out with plans to strengthen their collaboration capabilities in the cloud segment. Microsoft released Office 365 and Enterprise E5, and Cisco introduced Spark, focusing on the core functions of “message, meet, and call” for SME (small and medium enterprise) businesses.

Both products seek to enhance the benefits of the cloud by avoiding the upfront costs of on-premises equipment. Microsoft’s Office 365 and Enterprise E5 have conferencing tools such as Skype. On the other hand, Spark offers file sharing and video meetings with the option to screen share.

CSCO and MSFT Plan to Strengthen Collaboration Cloud Capabilities

“Both companies’ moves are a testament to the fact that [businesses] are thinking of moving unified communications to the cloud,” said Marcus Schmidt, senior director of products at West Unified Communications, a service provider based in Omaha, Nebraska. West Unified Communications implements both Cisco’s and Microsoft’s products in the unified communications space.

Schmidt continued, “Cisco comes at cloud-based unified communications from its traditional strong suit of voice, video and larger group meetings,” Schmidt says. “Microsoft comes at it from the productivity and collaboration angles.”

Cisco wants to attract new customers

According to Irwin Lazar, research analyst from Nemertes Research, Cisco is looking to attract a new customer base and also get existing customers “more comfortable with the cloud.” Lazar also said, “Cisco and Microsoft both have the long-term goal of delivering an entire breadth of services as hosted cloud solutions.”

The revenue from Cisco’s Collaboration segment rose 3% in fiscal 2Q16 to $1.0 billion. The segment accounts for 8.6% of the company’s total revenue. Cisco is also facing competition from Google’s (GOOG) Hangouts in the collaboration space.

Cisco accounts for 2.4% of the Power Shares QQQ, Series 1 ETF (QQQ) and 3.9% of the iShares U.S. Technology ETF (IYW).