WebEx to buy Intranets.com for US$45 million

WebEx Communications said Monday it has agreed to buy collaboration software developer Intranets.com for US$45 million in cash. The deal allows WebEx to take out a rival that had aggressively chased the smaller end of WebEx's core market, Web conferencing services.

WebEx President Bill Heil said WebEx plans to preserve Intranets.com's products and pricing. "Our strategy is to aggressively go after the small business market," he said. "We think that takes lower price points as a fundamental thing, and a software-as-a-service strategy."

Nine-year-old Intranets.com cycled through a variety of business models as it rode the dot-com boom and bust. The company offers corporate collaboration applications such as document management, database, group calendar and scheduling tools, priced on a monthly subscription basis. Its target market is small businesses with as many as 100 employees, the kinds of organizations that have outgrown ad-hoc solutions but don't want the complexity and expense of enterprise collaboration software.

In early 2004, Intranets.com began offering Web and audio conferencing. The move was aimed directly at undercutting Microsoft's Live Meeting software and WebEx's service. "Intranets.com now provides all of the functionality of similar Web conferencing offerings from WebEx and Microsoft Live Meeting, but at a fraction of the price," the company proclaimed in a September press release. The company's Web conferencing pricing has fluctuated since its introduction; a monthly subscription covering five presenter licenses currently costs US$199.

Effective Monday, WebEx took over the back end of Intranets.com's conferencing service, replacing NetSpoke Inc. WebEx's Heil pledged the transition would be smooth. "Immediately, the current customers have access to WebEx's real-time meeting technology," he said. "There's no pricing changes on anybody's horizon."

Heil said WebEx plans "substantial improvements" to Intranets.com's products before the end of the year, but he declined to offer more details. Intranets.com currently claims a customer base of 300,000 paying subscribers from 10,000 companies.

WebEx expects the Intranets.com acquisition to close within a month. The company plans to retain all of Intranets.com's 82 employees and to leave the company operating as a subsidiary in Burlington, under the leadership of current Intranets.com Chief Executive Officer Rick Faulk.

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