Battle of the cloud-based office productivity suites to get stormier

Cisco's hints of cloud-based office productivity apps mean better options for businesses

Vendors battle for firms' cloud-based office apps choice

Networking giant Cisco has clearly been looking for new opportunities to expand: for example, earlier this year it unveiled plans to extend its reach into server hardware. Its recent Cisco Live! 2009 event in San Francisco increased speculation that it is also looking to develop a set of cloud-based office productivity tools – potentially appealing for any firms looking to move away from Microsoft's Office tools.

Cisco’s theme at the event was "the power of collaboration"; chief executive John Chambers' keynote speech concentrated heavily on video systems. "The next phase of innovation will be around collaboration enabled by the network,” said Chambers.

At Cisco Live!, Cisco collaboration software group senior vice president Doug Dennerline hinted that the company would roll out a service that allows firms to share documents through the company's Webex collaboration platform.

Asked whether Cisco would broaden its range and move into general office productivity applications delivered through a software-as-a-service (SaaS) model, Dennerline said, "That opportunity exists, we’re looking at lots of assets that we could look to add to Webex Connect – that could include office productivity apps as well."

Dennerline added that Cisco often conducted reviews of the market and that, "strategically that's a direction that we'll be thinking long and hard about."

But would a Cisco-developed office productivity suite, based on its Webex platform, which it acquired in 2007 for $3.2bn (£1.98bn), be a serious challenge?

Datamonitor senior analyst Vuk Trifkovic sees the sense, from Cisco's perspective, in extending its reach into productivity systems.

“I think it's entirely credible, and I'm surprised that it wasn't a far stronger hint, and that Cisco hadn't done this a lot earlier. I don't think anybody could fault them for having an even more aggressive strategy on this front that they have now,” he says.

But not everyone is so convinced that there is a demand for such applications from Cisco.

"[Cisco is] struggling to work out how it competes in a world of Microsofts and Googles, which are pure software companies, when the only asset it has in that field is Webex," says Quocirca service director Bob Tarzey.

If Cisco is to produce a viable alternative to Office, it needs to build on its unified communications expertise, argues Tarzey. "They need to add more value in terms of products around unified communications, like office productivity applications. It also needs to figure out how to deliver these as online services better integrated with Webex."

Such development is likely to take a significant time, says Gartner research VP and distinguished analyst Michael Silver.

"Remember, Google has been competing with a free suite and hasn't made much of a dent. Further, any suite would need to have some compelling feature Microsoft Office does not have and would need to be available all the time, not just with Webex."

One method that could be deployed by Cisco is through an acquisition, something they haven't been shy about doing to shortcut technology development. This is something Datamonitor's Trifkovic said could happen, pointing out as the potential target Zoho, a vendor gaining considerable kudos with its online office productivity offerings.

Datamonitor's Trifkovic believes a Cisco move into cloud-based office productivity applications would be welcomed by IT leaders, as it would mean more choice. However, he adds that it is still early in the evolution of this particular market and that there is a lot of variability in the offerings out there.

“The strategy for very large organisations would be to try to introduce these online productivity suites selectively and to parts of the workforce who could work in a far-more collaborative fashion,” explains Trifkovic, “or perhaps with those types of workers who aren't heavy users of standard office productivity suites – that would be more efficient and economic for enterprises.”

And another threat to Microsoft’s cash cow Office, which currently generates around 25 per cent - approximately $17bn (£10.5bn) - of Microsoft’s total revenue of $65bn (£40), could surface soon if Dennerline's comments on Cisco's long-term strategy bear fruit. Nevertheless, the roadside is littered with pretenders to Microsoft’s throne.

Currently there are few other cloud-based office productivity application vendors, but Trifkovic said the situation could change as Adobe, with its Acrobat.com offering, and Zoho evolve their platforms.

One problem for enterprises could be the lack of interoperability of these cloud-based platforms. Trifkovic says the big question for Microsoft is how it's going to evolve its online Office offering.

In the long term, “it’s about who can offer office productivity applications, but also deal with enterprise worries such as service levels, security, and convenience,” says Trifkovic.

"People tend to live in a browser nowadays, and operating systems are becoming increasingly irrelevant – so where does that leave Microsoft? They also need to move more into the online world or they'll be facing the same problems that Cisco is, running its products in the old-fashioned way," adds Tarzey.