Cisco’s Collaboration Business Is Becoming Infrastructure – Not Software
- Tim Banting
- Feb 3
- 2 min read
Updated: Feb 26
Cisco is repositioning collaboration as a hardware-dependent extension of the network to mask slowing software adoption.
SO WHAT?
Cisco is shifting its financial weight. Networking grew 21% while collaboration managed only 6% in Q2 2026. High-end room kits and premium screens appear to have driven these gains, not Webex seats.
The vendor is moving away from competing with Microsoft Teams on software features. Instead, it is folding collaboration into broader CAPEX-heavy infrastructure deals. For buyers, this turns a communication tool into a long-term architectural commitment. You aren't just buying an app; you are (and arguably, always have been), bolting onto the Cisco backbone.
Analyst Take
The strategic consequence of Cisco’s Splunk integration is increased operational friction. Cisco aims to use Splunk’s data to personalize Webex, yet this adds layers of telemetry to tools users often avoid.
The Pitch: Cisco claims its "Agentic AI" and sovereign infrastructure focus creates a secure, intelligent workspace that justifies a premium.
The Reality: Deeply embedding collaboration into the network layer might create significant technical debt. Organizations could find themselves locked into proprietary hardware cycles to maintain basic software functionality.
Cisco is trading market aggression for a "safe choice" posture. It cannot outpace Zoom on integrated software or Microsoft on bundle value. By leaning into "sovereign" messaging, it targets risk-averse government and hyperscale accounts. This shift suggests Cisco may be deprioritizing the mid-market.
Webex is increasingly a "bundled default" rather than a user preference. According to Gartner, Microsoft Teams dominates with over 320 million monthly active users, making specialized software-only plays difficult for Cisco. [Source: Gartner Magic Quadrant for UCaaS, 2025]. The vendor risks becoming the "IBM of Collaboration"—reliable, but heavy and slow.
If I Was Advising the Vendor
Prune the Software Stack: Shift focus away from low-tier Webex seats that compete with "free" Microsoft bundles and double down on high-margin, executive-grade hardware.
Monetize Resilience: Stop selling features and start selling "unbreakable" uptime. Use competitors' outages to position Cisco as the only viable option for mission-critical communication.
Simplify the "Splunk Tax": Ensure the integration of Splunk data doesn't lead to "configuration hell" for IT staff.
NOW WHAT!
For Buyers
Audit Usage Before Renewal: Track active Webex engagement versus total license count to eliminate "zombie" seats in your next contract.
Test Hardware Neutrality: Evaluate open-standard meeting room gear that supports multiple platforms (Teams, Zoom, Webex) to avoid proprietary hardware traps.
Unbundle the Security Spend: Require Cisco to break out the specific cost of collaboration within larger security or networking enterprise agreements.
The market is moving toward a reality where you either buy a platform (Microsoft) or an infrastructure (Cisco).
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