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AMI SMB Perspective
Webex Teams Up With Intranets.com to Expand Collaboration Offerings and
Reach
By Laurie McCabe
lmccabe@ami-partners.com

August 5, 2005


News
Webex Communications, a leading provider of Web conferencing solutions, announced on August 1 that it would
purchase privately held Intranets.com for $45 million in cash. In acquiring Intranets.com, which provides collaboration
applications such as document sharing, calendars and database applications for SMBs, Webex will broaden its
portfolio of collaboration solutions, and extend its reach into the small and midsize business (SMB) market. Webex
expects the acquisition to close later this month, with plans for Intranets.com to operate as a subsidiary in its current
Burlington, MA location. Webex will also retain Intranets.com's senior management team and all of its 82 employees.

Perspective
Webex and Intranets.com are both software-as-services (SaS) pioneers that have successfully surfed the highs and
lows of the SaS industry and collaboration market--but from different perspectives and on a different scale. Formed
in 1995, Webex led the way in establishing Web conferencing as a virtual alternative to face-to-face meetings, events
and training. Today, Webex is a Web conferencing heavyweight, with 22 quarters of consecutive revenue growth
under its belt, and 2005 revenue guidance of $303 million to $315 million. The company has more than 11,000
corporate customers, mostly from the ranks of large enterprises and upper-mid-market businesses, which conduct an
average of 10,000 meetings per day. About 88 percent of its sales are direct, with the remainder from marquee
distribution partners, such America Online, Autodesk, BT Conferencing, Global Crossing, MCI, Salesforce.com, and
Telstra.
Intranets.com, meanwhile, has focused on providing asynchronous team collaboration tools--à la Lotus Notes--
tailored to SMBs' needs and price requirements. The vendor's integrated suite provides solutions for document
sharing, group scheduling, task management, discussion forums, contacts and database applications. In 2004,
Intranets.com added Web and audio conferencing to its portfolio, under a private-label agreement with NetSpoke.
Since transitioning from an advertising-based revenue model to a fee-for-service model in 2001, Intranets.com has
garnered more than 300,000 subscribers across 10,000 customer accounts--racking up 16 quarters of consecutive
growth.

While Intranets.com also relies heavily on direct sales, it has geared its strategy and tactics to reach, sell and service
SMBs profitably via the Web. For instance, Intranets.com deploys paid search to increase uptake on its free 30-day
trials, continually comparing, analyzing and refining its search terms to increase market reach and boost conversion
percentages from search to closed sales. Intranets.com has also coupled live telesales reps with its automated email
and follow-up system, doubling conversion rates from trial to paying customer. And, while Intranets.com compensates
salespeople based on new sales, it compensates service people on customer retention.

Analysis
Webex's acquisition of Intranets.com is synergistic for both companies. In the near term, it gives Webex a new route
into the SMB market, and provides Intranets.com with the resources to increase its marketing initiatives. In addition,
Webex can leverage Intranets.com's SMB penetration and expertise to launch additional services, now under
development, to expand and enhance Intranets.com's integrated suite.

With the purchase, Webex has a broader, more comprehensive set of SaS solutions that span across real-time and
asynchronous functions. Moving forward, Webex can use Intranets.com's core services and installed base as a
springboard to move beyond its existing real-time Web conferencing and related services--critical to Webex's
sustained growth as the Web conferencing market continues to commoditize.
Beyond the impact for these two companies, this acquisition highlights the continuing growth and evolution of the SaS
industry. As discussed in AMI-Partners' April 2005 report, Software-as-Services: Moving On Demand To In Demand
With SMBs, consolidation in the industry is well under way, as evidenced by previous deals, such as Siebel's
acquisition of UpShot; Microsoft's purchase of PlaceWare (now Microsoft LiveMeeting), and recently, Frontbridge;
Iron Mountain's acquisition of Connected; and WebSideStory's deal to buy Atomz--just to name a few. This latest
consolidation can only serve to further validate the SaS model and speed market growth.


For More Information
For more information about AMI-Partners, or our Global SMB research, please call AMI-Partners at 212-944-5100,
email ask_ami@ami-partners.com, or visit the AMI Web site, www.ami-partners.com.

About Access Markets International (AMI) Partners, Inc. (AMI-Partners)
AMI-Partners specializes in IT, Internet, telecommunications and business services strategy, venture capital, and
actionable market intelligence--focusing on global small and medium business (SMB) enterprises. The AMI-Partners
mission is to empower clients for success with the highest quality data, business planning and "go-to-market"
solutions. AMI was founded in 1996 under the name of Access Media International (USA), Inc. by Andy Bose,
formerly a group vice president at IDC. Since its inception, the firm has built a world-class management team, each
with ten to fifteen years' experience in IT, telecom, online communications or multimedia.

AMI-Partners has helped shape the go-to-market SMB strategies of more than 150 leading IT, Internet,
telecommunications and business services companies over the last eight years. The firm is well known for its IT and
Internet adoption-based segmentation of the SMB markets; its annual retainership services based on global SMB
tracking surveys in 20 countries; and its proprietary database of SMBs and SMB channel partners in the Americas,
Europe and Asia-Pacific. The firm invests significantly in collecting survey-based information from several thousand
SMBs annually, and is considered the premier source for global SMB trends and analysis.