Cisco's announcement today that it is to buy WebEx underlines the continued ascendancy of two things—online collaboration and software as a service (SaaS). The purchase makes sense as an extension to Cisco's existing collaborative capabilities—grouped together under Cisco Unified Communications.

Some might view this as a departure for Cisco, as unlike Cisco's other collaborative offerings all WebEx's products are SaaS offerings, but there is a good fit with its SONA strategy (service oriented network architecture). The aim of this is to see services optimised at the network rather than the software level. WebEx could be just the proof point Cisco is looking for.

Offering online conferencing as an on-demand software service makes sense. By its very nature the participants of online conferences are remote from each other and need to access a centralised resource. WebEx is the number one global player in online conferencing, a position Cisco will inherit. But in a healthy second place is Microsoft with its Live Meeting service, a result of it own acquisition of Placeware in 2003. Today's news ups the anti in the race between the two vendors to lead in the collaboration market.

Things first started to hot up with Microsoft's acquisition of Teleo in 2005, enabling it to introduce advanced voice services with the release of Communications Server 2007. In return Cisco needed to make moves to protect its VoIP leadership position that it shares with Avaya. By acquiring a broader platform for live interaction, Cisco can make greater play of its SIP-based voice services, and so try to marginalise Microsoft's impact in this important market.

So Cisco and Microsoft continue to go head to head—pity the small guys.