News reports on March 4 indicated that Microsoft Corporation MSFT was considering the acquisition of Slack, a cloud based messaging platform similar to Skype, for $8 billion. However, with CEO Satya Nadela and founder Bill Gates, along with many others, not completely convinced of the move, Microsoft had to withdraw its bid.
Slack is similar to Microsoft Skype in that it offers video and text messaging, along with file sharing facilities. The reason for Microsoft's interest in the app was its huge success since its release 2013. Statistic Brain Research Institute estimates that the app has about 2.3 million users, of which 700,000 are paying users.
Cisco Invests in Spark
J.P. Morgan's Rod Hall maintained an Underweight rating on Cisco Systems, Inc. CSCO, with a price target of $17.
"In partnership with Cisco Investments, Cisco has created a fund to invest $150m in the Cisco Spark ecosystem built on the Cisco Collaboration cloud which reportedly enables customers to message, meet, or call anyone, anywhere, anytime," Hall mentioned.
Cisco Acquires Synata
Cisco Systems stated that U.S. based companies would now be able to use Spark's messaging, meeting and call services. In addition, the company announced the acquisition of Synata, a San Francisco based firm "whose technology allows users to search both on-premise and cloud-based applications simultaneously from one platform," according to the J.P. Morgan report.
Hall expects Synata's search technology to work within the end-to-end cloud based encryption that Spark functions on.
Cisco vs Slack
The analyst believe that it will be difficult for Cisco Systems to catch up to Slack. "However, we note that Cisco does have unique UCS integration capabilities for large businesses which could quickly tilt the playing field in their favor," Hall added.
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