By now you will have heard that Cisco entered an agreement to buy web conferencing and collaboration software company Webex yesterday for $3.2 billion. That represents a 23 percent premium over their closing share price on Wednesday. Since it’s such a big deal, It even made the BBC morning news. It marks another significant push in to the SMB/SME marketplace for Cisco, as well putting them firmly in the Software as a Service game. Frank Gens over at IDC sees it that way, although in addition it puts them firmly head to head with Microsoft in the collaboration space. I’m slightly confused as they had already started a partnership a year ago with the other big enterprise collaboration player IBM, when they integrated IBM Lotus Sametime and the Cisco Unified Communications System. I’ll be looking to find an explanation of how that conflict will work out, as well as for justification of the price premium.

Over at ZDNet, Dan Farber has highlighted all of the 24 (yes 24!) other acquisitions Cisco carried out since 2005. He asks and answers:

“What does it all add up to? A giant networking squid that wants to get it tentacles on the billions of users and devices on the fast growing Internet. Similar to Sun’s motto, “the network is the computer,” Cisco envisions the “network as a platform” for real-time interactions, and that it should power the network with everything from the routers and switches to VoIP calls and socially networked applications. No part of the stack seems to be out of bounds for Cisco as it evolves its network services platform. “

Also on ZDNet, Phil Wainewright has been carefully studying the wording of the various statements and announcements. He believes that the document sharing and workspace collaboration components of the Webex business are the most important to them, along with buying knowledge of the SaaS approach to business. He says:

“My take is that it’s Cisco’s view that the Connect and WebOffice side of the WebEx business is where the greatest value remains to be unlocked.”

Phil also highlights the fact that, as Webex comes under cost pressure from Skype, Citrix and others, becoming part of Cisco and moving towards more IP based telephony makes perfect sense.

Om Malik’s view is encapsulated in his final paragraph:

“WebEx has about two million customers, many in the small to medium sized businesses - an area of focus for Cisco in recent years. With the Linksys business unit’s special focus on SMB, this deal has very little downside, unless Cisco manages to mess things up.”

Maybe a 23% premium isn’t so difficult to understand after all.