Cisco's Focused Buyout Binge

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Cisco Systems (Nasdaq: CSCO) is in the middle of a tiny acquisition binge right now. The networking giant wants to rule the enterprise messaging world, too.

The recently closed buyout of email and calendaring software expert PostPath was a small but significant instant upgrade to Cisco's collection of business-ready software as a service (SaaS) collaboration software. Then the company bought out Jabber, the software foundation behind a well-known instant messaging platform. Despite the lack of published financial details, I can tell you that this is a much bigger deal.

The XML-based Jabber protocol has an open-source pedigree and aims for open communication across any instant-messaging platfom you choose. A Jabber server ties together disparate and proprietary messaging systems like Microsoft's (Nasdaq: MSFT) MSN/Windows Messenger, Yahoo! (Nasdaq: YHOO) Instant Messenger, AOL's AIM/ICQ duo, and Jabber's own fully documented XMPP protocol. XMPP also happens to be the language spoken behind the scenes of Google (Nasdaq: GOOG) Talk. Now Cisco keeps tabs on some of Mighty G's business.

Tightening the thumbscrews on Google would be a surprising and stupid move, though. "Our intention is to be the interoperability benchmark in the collaboration space," says Doug Dennerline, Cisco's VP of communications software, and the company is way more likely to help its customers organize whatever messaging systems they have than to impose its will with an iron fist. Remember, one of Cisco's defining attributes is its close collaboration with major clients like Hewlett-Packard (NYSE: HPQ) (172,000 employees worldwide need to talk!) and AT&T (NYSE: T) (307,000 employees). When these guys have problems that could be solved with networking solutions, Cisco wants to be there with the answer.

Cisco is taking on established intra-office chatting solutions like IBM's (NYSE: IBM) Lotus SameTime and Microsoft Office Communicator with the Jabber purchase, but also rides piggyback on established rivals who just need to talk to one another. The deal dovetails nicely with other recent buys like PostPath and WebEx, and it's a mistake to think of Cisco as nothing but hardware these days. The software division is coming along nicely, with a unified theme of "enterprise communications."

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