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For its part, AT&T, of San Antonio, is buying Internet-based conferencing and collaboration software provider Interwise for $121 million and with it a bigger play in the video, Web conferencing and collaboration race against rivals Sprint Nextel, Verizon and Cisco Systems.

AT&T announced the acquisition of Interwise Oct. 1. Interwise offers VOIP (voice over IP), Web and videoconferencing services for both on-premises and hosted deployment, along with a hybrid of on-site and hosted services. AT&T said it will offer these services alongside its own networking, VOIP, conferencing and collaboration services, as well as its MPLS (Multiprotocol Label Switching)-based IP network for businesses.

There is no shortage of market opportunity for such services, which businesses often use in conjunction with e-mail, instant messaging, presence and other collaboration tools to help their employees work together on tasks. Research company Frost & Sullivan said the market for audio, Web and videoconferencing will be worth $5.9 billion through 2007, with growth continuing into 2008.

The added utilities will help AT&T better reach the lucrative market opportunity selling into enterprises that the phone companies and other technology providers crave. Sprint Nextel and Verizon are also offering audio, Web and video­conferencing for their business customers.

"Were really excited about having Interwise as part of the company because they are one of the only ones to offer premise[s]-based collaboration, network-based collaboration or a hybrid solution," allowing users to collaborate across both environments, said Steve Sobolevitch, AT&Ts vice president of business development.

IDC analyst Robert Mahowald said the deal is a step up for AT&Ts enterprise business, which has strong, hosted audio conferencing but lacks on-premises services and has relied on reseller agreements for Web conferencing to this point.

"As they try to grow their enterprise business larger and larger toward [broader] Web collaboration, this gives them a development platform," Mahowald told eWeek. "It gives them some customers, but it also gives them a platform that they can actually play with as opposed to Microsofts or Ciscos, which they were just reselling."

To be sure, phone companies are far from the only technology providers interested in Web collaboration. Microsoft and IBM have been carving out such packages through their SharePoint and Lotus portfolios, respectively, as part of broader unified communications strategies. Adobe Systems and Citrix Systems also play in the Web conferencing space.

Cisco, of San Jose, Calif., lent spirit to the hunt in March with its bid to buy WebEx for $2.9 billion. But most acquisitions in this space are fill-in-the-gap deals, such as IBMs Aug. 22 deal to buy on-demand Web conferencing software maker WebDialogs.

"The way these independent companies are flying off the shelves, I dont even know whos left to buy," Mahowald said.

Should the deal close in the fourth quarter as AT&T expects, Interwise will operate as a business unit within AT&Ts $35 billion Global Business Services group, which is led by Group President Ronald E. Spears.

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