Cisco strengthens UC story with PostPath buy

Cisco is putting up US$215 million for PostPath so it can include the company’s e-mail and calendaring software in Cisco’s upcoming collaboration service, WebEx Connect. But the software could also become a component in a unified communications bundle that businesses buy outright, industry observers say.

Cisco says it plans to put PostPath Server in the cloud and sell an e-mail and calendaring service to its customers, packaged with the instant messaging, collaboration, wikis and document-sharing capabilities already in the beta version of WebEx Connect. “Our ‘cloud-based’ delivery model offers our customers rapid deployment and compelling economics,” says Doug Dennerline, senior vice president of Cisco’s Collaboration Software Group (CSG).

But the set of applications available in this software-as-a-service model could be attractive as a software package that businesses buy and manage themselves, says Alex Lewis, a senior consultant at IT consulting firm Convergent Computing, and a Microsoft Subnet blogger.

Combining Cisco Call Manager, WebEx and PostPath would make a credible unified communications platform, Lewis says. “The potential downside is that Cisco isn’t known as a software company, and completing the technology integration might be challenging for them,” he says.

Another downside for Cisco is the existing competition, says Michael Osterman, principal in Osterman Research, a consultant on messaging and collaboration, and author of Network World’s Unified Communications newsletter. “The on-premises market is quite competitive, and Exchange is well-entrenched, which is why Cisco may want to offer it only as a service,” says Osterman.

The upsides are PostPath’s native compatibility with Microsoft Outlook and its pricing. “It is the only Exchange alternative that does not require a plug-in to work with Outlook, and its admin and licensing costs tend to be lower than for Exchange,” Osterman says.

As for the intended WebEx Connect software-as-a-service offering, the economics are particularly compelling to small businesses, says Brad Shimmin, an analyst with Current Analysis.

“PostPath can offer an alternative to Microsoft’s hosted Exchange service,” he says. PostPath is less mature than Exchange, but the WebEx Connect service with PostPath may still be attractive, particularly among small and midsize businesses, he says. “These customers will look at WebEx Connect and say this is scalable and secure and better than any IT infrastructure I can put together, and the cost differential is night and day.” He says competitors Citrix, Adobe, IBM and Microsoft address the largest businesses with their software-as-a-service communications platforms, but are homing in on smaller businesses with these services because they represent a large, receptive market.

Large companies may be most reluctant to put their e-mail into a service-provider cloud because they may have legal reasons for archiving e-mails in their own facilities. “That’s where the differentiation is for large companies,” Shimmin says.

Cisco last week announced its plans to buy privately held PostPath, which was founded in 2003 and is headquartered in Mountain View, Calif., with offices in Bulgaria.

With PostPath no middleware is required to interoperate with Microsoft Outlook, Exchange, Active Directory, ActiveSynch and Blackberry Enterprise Server, among other applications. It also promotes itself as a Linux-based replacement for Exchange that offers larger data stores and higher performance in terms of how many hits per minute the platforms can handle.

In addition to its flagship PostPath Server, PostPath sells a version for VMware as well as an archiving edition that it says stores e-mails in a less cumbersome fashion than Exchange does with its journaling of old e-mails.

Cisco says it expects to close the deal by the end of October and add PostPath’s 67 employees to its Collaboration Software Group. CSG is part of Cisco’s recently established Software Group, which oversees the IOS network operating system, network and service management, unified communications, policy management, and software-as-a-service offerings.

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