Cisco Buys BroadSoft for Nearly $2 Billion to Build Out its SaaS Business

Tech titan Cisco Systems Inc. has announced plans to acquire BroadSoft Inc. as part of its larger initiative to increase the SaaS portion of its product mix. The $1.9 billion deal will help the $171.2 billion networking giant diversify its offerings outside of legacy switching and routing segments by enhancing its collaboration business.

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BroadSoft, founded in 1998, sells enterprise software which helps businesses better manage communication systems. The Maryland-based company enables mobile, fixed-line and cable service providers to deliver real-time communications over their IP networks.

Customers include telco providers Verizon, BT, Telstra and Telephonica, which buy its “call control” software to then relabel it and sell it to their customers in place of the pricey public branch exchange (PBX) switches used in the past. Other key product areas at BroadSoft include call center applications and higher level software that offers features such as call waiting. The company’s unified communications software allows workgroups to hold group voice chats, video conferences and share screens and documents.

“Think of us as Intel Inside but for telco,” said BroadSoft’s VP of product marketing Mark Straton.

Facing declines in core networking markets, Cisco has doubled down on software and services delivered in the cloud. The buyout follows handfuls of strategic acquisitions by Cisco, including its $3.7 billion purchase of application performance management company AppDynamics earlier this year. Last week, news broke that the San Jose, Calif.-based tech behemoth intended to purchase big data and machine learning platform Perspica and merge its engineering team with AppDynamics.

In the collaboration space in particular, Cisco first launched WebEx and later Spark as it heads off against tech giants and niche startups alike. Earlier this year, cloud computing and e-commerce giant launched Chime in efforts to compete against Microsoft’s Skype for Business. By integrating Cisco’s meeting and collaboration tools with BroadSoft’s call center software and new-age cloud expertise, the firm hopes to more strongly position itself against its competitors in the high growth market.