Cisco has reported revenue declines of 13 percent for its collaboration business, which houses Webex.
It is the third consecutive quarter that the business unit has endured a revenue drop, and it only seems to be getting worse.
Indeed, last quarter the drop was ten percent. The quarter before, it was one percent.
Sharing the latest results during an earnings call, Scott Herren, Chief Financial Officer at Cisco, said:
Collaboration was down 13%, driven by declines in collaboration devices and meetings, offset slightly by growth in calling and contact center.
Nonetheless, these figures consider its cloud and legacy business. As such, it is not Webex that is losing ground.
Instead, the problem is that it is not growing as fast as Cisco's legacy business is shrinking.
Perhaps this is no surprise given the sheer number of cloud communications vendors battling to play second fiddle to Microsoft Teams.
Yet, Cisco has taken action to address the issue. As is perhaps evident in its Microsoft partnership, the vendor is placing more emphasis on hardware, leveraging that core competency, and spreading its influence.
There are also additional steps that Cisco could take. For instance, it may release metrics such as monthly active users to create powerful headlines, as Microsoft does (here is an example).
However, some analysts have called for a more drastic course of action.
Selling Hybrid Work as a Package
Talking to UC Today after Cisco’s previous earnings call, Zeus Kerravala, Principal Analyst at ZK Research, advocated for a change in its approach to selling its collaborations portfolio.
Instead of leading with Webex, Kerravala suggested that Cisco leverage its broader portfolio and pull it through. He stated:
One of the things it hasn’t done a very good job of is to sell the pallet of hybrid work.
Such a pallet includes networking, security, and collaboration, all of which Cisco offers. As such, Kerravala recommends taking a leaf out of the Microsoft playbook.
"If Microsoft is throwing Teams in as part of its productivity suite, there is no reason why Cisco can't throw Webex in as companies buy more security and networking software," he said.
"They have to figure that out as a way to play that hybrid work angle instead of trying to lead with Webex all the time."
Of course, Cisco could continue churning out new AI capabilities and wrestle with the likes of Zoom, RingCentral, and 8x8 to become Microsoft Teams' biggest challenger.