Cisco has agreed to pay $1.9 billion in cash for BroadSoft, a software company that makes communications tools for the top telecom providers in the world. The move further diversifies Cisco's business beyond network hardware such as routers and switches and into cloud-based software services.
Maryland-based BroadSoft provides "unified communications software and services" for mobile, fixed-line, and cable service providers, including Verizon Communications Inc. and AT&T. In turn, these companies sell these services to their business customers, according to Reuters.
BroadSoft has existing partnerships with 450 telecom carriers in 80 countries – including 25 of the top 30 globally – and over 19 million small and medium-sized business subscribers, Rob Salvagno, VP of corporate business development at Cisco, wrote in a blog post.
“By combining BroadSoft's open interface and standards-based cloud voice and contact center solutions delivered via Service Provider partners, with Cisco's leading meetings, hardware and services portfolio, the combined company will offer best-of-breed solutions for businesses of all sizes and deliver a full suite of collaboration capabilities to power the future of work,” states the official announcement of the deal, which is expected to close during the first quarter of 2018. BroadSoft employees will join Cisco's Unified Communications Technology Group and will consolidate products.
Upon closing the transaction, the two companies plan to offer a comprehensive SaaS (Software as a Service) portfolio of cloud-based unified communications, collaboration, and contact center software solutions and services for customers of all sizes, wrote Salvagno.
Alan Pelz-Sharpe, an analyst who is founder at Deep-Analysis, told TechCrunch that, “Broadsoft is a nice fit for Cisco as its products and strategy targets SME’s whereas Cisco targeted enterprises. Together they cover a much bigger addressable market and looks like a pretty sensible matchup.”
“Every customer, when they think about their digital strategies, they think about how they interact with their customers,” Cisco CEO Chuck Robbins told CNBC's "Squawk on the Street". “This acquisition of BroadSoft actually gives us the most comprehensive set of collaboration solutions for our customers.”
Cisco's latest acquisition, its 200th overall, is part of its innovation strategy set in motion two years ago to steer away from its weakening hardware business and into accelerating growth areas such as Internet of Things, artificial intelligence, security, and cloud-based communication services.
The largest maker of networking equipment in the world, Cisco's push to focus on software is evident in its most recent acquisitions. The deal to acquire BroadSoft follows Cisco's $3.7 billion purchase in March of AppDynamics, a maker of cloud-based application and business performance monitoring solutions. Cisco last week said it also will buy Perspica, a machine learning-driven operations analytics firm, and fold it into AppDynamics.