WebEx – the Multimedia Dial Tone

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Content Copyright © 2005 Bloor. All Rights Reserved.

Most people who have tuned into a Webcast or had software demonstrated over the Internet will have used a WebEx service. They might not have realised the fact or that similar services are available to them, so WebEx is stepping up its marketing. It is looking for more business in Europe and elsewhere outside its home territory of the USA. A particular target is sole traders and small businesses.

WebEx Communications is an application service provider (ASP) that offers a set of Web-based real-time communication services, providing video, audio and programmatic links. These services include Meeting Center, Event Center, Sales Center, Training Center and Support Center. Any of them can run between or within organizations. They are available separately or bundled as the Enterprise Web Collaboration Suite.

As their names suggest, these groupware services are tuned to specific contexts. They all offer video and audio conferencing, instant messaging, PC program and Web page sharing, and a white board. Some, such as Meeting Center, let users record and edit any of the content for future viewing. There are application program interfaces (APIs) to most common enterprise application programs. A wide range of trading partners such as Salesforce.com, Learn.com and SumTotal use these to offer extensions to the basic services. Users can launch a WebEx meeting from within these third-party offerings.

Other WebEx offerings are SMARTtech, for technicians to look after unattended remote computers and other equipment, and WebEx PCNow (formerly MyWebExPC), which allows users to run their own PC from anywhere.

These services can be made available on various bases, including yearly contracts or pay as you go. (The latter cost from £0.19 a minute in Britain or 33 cents in the USA.) Free trials of any of the main services are available from WebEx’s Web site.

All the services are supplied through the company’s own switched backbone network, the MediaTone Network. This has nodes in major cities worldwide – all of them mirrored – with local access via the public Internet. As a result, says WebEx, service supply is consistent, reliable, fast, scalable (and in small increments) and secure. The company likens MediaTone to the telephone dial tone – always there.

Access from users’ machines uses Secure Socket Layer (SSL) encryption. The network itself is highly secure and has WebTrust and SAS70 certification. Because no traffic is stored in the network (other than vector versions of some images), anyone getting past the MediaTone security arrangements would find little worth stealing. The Department of Defense in the USA is a WebEx customer, which is as good a reference as one could wish.

WebEx began in February 1995, under the name Silver Computing. It changed its name over the next few years to Stellar Computing Corporation and ActiveTouch, settling on WebEx Communications, Inc. in July 2000. The company employs over 1,800 people and has 15,000 customers worldwide, 80 to 85 per cent of them being in North America. They include two-thirds of the Fortune 100 and over a third of the Fortune 1000.

The company lost money in its first two years of operation as WebEx Communications. Since then it has grown rapidly and profitably. In 2004, its turnover was $249 million, an increase of 32 per cent on the previous year. Pre-tax profits were just under $70 million and there is plenty of cash ($221 million at June 2005) showing in the balance sheet. In September 2005, WebEx bought Intranets.com, which provides hosted intranets to over 100,000 customers, mainly small businesses.

WebEx’s buying arguments for its services are simple and powerful:

  • There is just a few kilobytes of plug-in software for users to install and, thus, no in-house maintenance or support demand nor any extra equipment needed
  • A wide range of application software is available, and is always the current or relevant version
  • The service is fast and attractive, with low network overheads
  • Access can be from anywhere, using machines running Microsoft Windows, Apple OSX, Linux or Solaris
  • Session set-up is quick and easy
  • Pricing is related to use
  • There are no capital costs and little or no project cost
  • Organization size – large or small – is no hindrance to effective use.

Against these is the cost of WebEx’s service, which is a constant target by competitors. Also, those few kilobytes of plug-in software need updating regularly, something some users find tedious. That is countered by Sylvia Jensen, Director of Marketing EMEA for WebEx, who points out that this takes a few minutes to do and is “pretty seamless for the customers”. She continues: “This is one of the benefits of having an on-demand service, you always have the latest product and bugs get fixed right away. If this were software that had to be maintained internally, the IT department would have to do all this work and there would probably be delays or it wouldn’t happen.”

WebEx’s main competitors for general use are IBM/Lotus SameTime and Microsoft Live Meeting. SameTime is a product rather than a service and thus demands the installation of server software, with its associated capital, licence and overhead costs. It cannot run outside the user organization’s own network. Live Meeting is, like WebEx, a service. Formerly called Placeware, it and the company that made it, were bought by Microsoft in January 2003.

Other competing services include Raindance, which is about a third the size of WebEx. Many large telcos, who once expected to dominate the teleconferencing market, are these days WebEx resellers.

Documentum’s eRoom is a competitor in the product market. So, too, is First Virtual Communications’ Click To Meet, bought with the company in March 2005 by Radvision. GoToMeeting, from Citrix, is an interesting offering for smaller organizations.

There are some specific competitors. In training, it is Centra Software, which has recently been bought by Saba. In support, it is Expertcity (owned by Citrix). In events, it is Raindance. WebEx seems unruffled by any of these.

This general air of effortless superiority seems to pervade the WebEx corporate persona. Based on its performance in the last few years, this is justifiable. Assuming continued good management, its prospects are excellent.