Cisco made a big push into the web video conferencing space in 2007 when it paid $3.2 billion to acquire WebEx, a leading provider of web conferencing geared primarily toward businesses. Web conferencing is intended to help companies conduct more frequent remote meetings while saving travel costs. Cisco makes money by either charging subscribers a monthly fee for access to its web conferencing service or by charging usage based fees.
Cisco (previously WebEx) subscribers have grown from 100,000 in 2004 to around 500,000 subscribers in 2008. We estimate that Cisco will have over 600,000 subscribers by the end of the forecast period and will continue to face competition from GoToMeeting (Citrix) and Adobe Connect.
Although Cisco has made web conferencing an important aspect of its future strategy, we estimate that the business contributes less than 1% of the $21.17 per share Trefis price estimate. By integrating web conferencing features with Cisco’s IP telephony hardware, the company will help make its hardware products amongst the most feature-rich available for business customers but the direct benefits from web conferencing service are likely to remain small.
Within Cisco’s content on our platform you can see how Cisco’s stock would be impacted if Number of Subscribers were to grow faster than the Trefis forecast.
