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    Web Conferencing Services Market Heats Up

    By
    Paula Musich
    -
    August 23, 2007
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      IBMs announced acquisition of WebDialogs, a relatively small company in an increasingly important niche, shone a light on the nascent but evolving market for Web conferencing services.

      IBMs August 22 buyout of the privately held company, for an undisclosed amount, is the latest in a string of acquisitions or other moves in the space by larger players. Earlier this year, Cisco Systems announced its acquisition of market leader WebEx for $2.9 billion. Google, for its part, bought the Web conferencing technology owned by Marratech, in April, and Adobe entered the market when it inherited the Web conferencing technology that came with its 2005 Macromedia acquisition.

      Read more here about IBMs WebDialogs acquisition.

      Google, Adobe and now IBM are vying to grab a larger share of the market from market leaders Cisco (thanks to WebEx), Microsoft, which sits in second place with LiveMeeting, and Citrix Online at No. 3 in terms of market share.

      Meanwhile, IBM and rival Microsoft are edging toward each others turfs in the broader Web conferencing market, which includes both on-demand conferencing services and on-premises conferencing managed by the customers themselves.

      WebDialogs moves IBM out of the on-premises-only Web conferencing space and into the services arena, allowing it to vie for market share among SMBs (small and midsize businesses). Microsoft, on the other hand, recently announced that its Office Communications Server includes an on-premises Web conferencing component.

      All of those vendors, along with a lot of small, independent Web conferencing services providers, are chasing a market opportunity that is projected to grow from $750 million in 2006 to more than $1 billion by 2010, according to Andy Nilssen, senior analyst and partner at Wainhouse Research.

      IBM attempted to upstage Microsoft at the VoiceCon 2007 conference with the news of its acquisition of WebDialogs. Click here to read more.

      All of the recent posturing by the larger players raises the question of whos next on the auction block?

      “There are probably 50 other [small] vendors out there, almost all of whom offer [Web conferencing] as a hosted service. But there arent that many more Web conferencing companies out there that are ripe for acquisition that would make good purchases,” said Melanie Turek, principal analyst at market research firm Frost & Sullivan.

      And among potential acquirers, its unclear which vendors are likely to step up. “The logical remaining players in the unified communications space are Avaya, Nortel and Siemens, but they are not in a position to want to do that right now,” added Turek.

      From outside the unified communications fray, other large vendors that could be interested include Oracle and Google, but both have already taken some steps to address the market.

      Oracle has Oracle Web Conferencing, which is both an on-premises offering and a service. But Oracle has done little to promote the offering, according to Nilssen.

      “We have a panel of hundreds of users that we ask every quarter what they are using or thinking of using, but Oracle never comes up on the radar,” he said.

      And its not yet clear what Google plans to do with the Web conferencing technology it acquired from Marratech, Nilssen said.

      In the meantime, other “interesting” pure-play Web conferencing companies include Interwise, Elluminate, NetViewer and WiredRed Software, Nilssen said.

      As larger players pick up such conferencing technologies, they are looking to incorporate those into broader unified communications strategies that could shape the direction of the market.

      “Web conferencing is part of a bigger process of getting work done. Going forward it may become more of a feature than an application and [become part of] something bigger,” said Nilssen.

      He said he believes that is IBMs intention with its WebDialogs acquisition. “IBM, Microsoft and Cisco are saying this has to be a part of a base platform people can build applications on top of,” he said.

      Check out eWEEK.coms for the latest news, views and analysis on voice over IP and telephony.

      Paula Musich
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