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In May 2011, Microsoft (NASDAQ:MSFT) announced it would buy video and voice messaging leader Skype for $12 billion. The move was echoed by Microsoft’s $1.2 billion deal for social network Yammer. Microsoft is poised to enter the collaborative video conferencing market with a force that is upsetting Cisco (NASDAQ:CSCO).
This bothers Cisco Senior VP of Collaboration Technology because he believes that Microsoft may make Skype’s video offering a closed system. “The voice offering is open but their video offering is set to remain proprietary. We have seen this before as companies try and make video a closed system to try and gain a competitive advantage,” he said. Cisco points to its own record of open standards when building IP networks, stating that interoperability is essential for industry growth.
Apple (NASDAQ:AAPL) has also entered the video conferencing game with FaceTime, which works right out of the box on Apple devices. Apple has pushed the function aggressively in order to compete with players like Skype and the less-used Google (NASDAQ:GOOG) video chat. Apple’s upcoming September 12 may see an upgraded front-facing camera, which makes FaceTime even more attractive. However, AT&T (NYSE:T) may hurt Apple’s FaceTime push by requiring customers to purchase unpopular and expensive “mobile share” plans.
Apple also does not share or license its FaceTime technology. With Apple and Microsoft so far ahead in the game, Cisco will either need to open up existing propietary video technology, or acquire some of their own if it wants to compete in the same space.
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