One of the strategic motivators behind the announcement is for Cisco to enhance its position as a data center equipment provider.

Cisco followed up this week's announcement of its Cius business tablet at Cisco Live 2010 with a new partner offering called Cisco Hosted Collaboration Solution. The offering will be based on the virtualized Cisco Unified Computing System (UCS), a part of the Cisco Unified Services Delivery Solution, in support of a variety of existing Cisco collaboration applications currently available as customer premises solutions: Cisco Unified Communications Manager (UCM); Cisco Unified Contact Center; Cisco Unified Mobility; Cisco Unified Presence; and Cisco Unity Connection. Cisco Webex Meeting Center, hosted by Cisco, will also be available as part of the package. Additional Cisco applications will be added over time as they become available. Cisco partners who purchase the new bundled solution will license the use of specific software applications for resale to their customers though a subscription-based service.

Cisco is positioning the hosted solution to its partners, particularly network carrier service providers, based on four fundamental benefits:

1. The ability to develop and offer a broad range of differentiated communications and collaboration services, centered on Cisco UCM, for new revenue generation;

2. Minimize costs and maximize operational efficiency through a centrally located and managed data center based on Cisco UCS;

3. An infrastructure platform that can be scaled to satisfy the needs of a growing customer base;

4. Investment protection of existing technology.

Cisco will also be offering its partners a full suite of professional services to help deploy the Cisco Hosted Collaboration Solution as a Communications as a Service (CaaS) model.

With the Hosted Collaboration Solution, Cisco is touting partners' ability to offer their customers a common user experience regardless of the system deployment model: hosted, premises or managed.

Though the announcement does not break new ground from a customer perspective, because many Cisco partners have already been delivering UCM and its associated applications as a CaaS offering, it does serve as a means to formalize a bundled solution based on an all-Cisco infrastructure. Cisco has said that it designed the offering to run on Cisco UCS for optimized system operation and service delivery. One of the strategic motivators behind the announcement is for Cisco to enhance its position as a data center equipment provider, because Cisco partners have not necessarily implemented their hosted solutions on the UCS platform.

Interest in hosted communications and collaboration solutions has been gaining momentum during the past year, especially with the proliferation of virtualized computing systems that lower costs and improve operational efficiency. Though the early market demand for CaaS offerings has been strongest among SMB customers, large enterprise customers now appear to be taking a closer look at the alternative to premises solutions. CaaS is a potential multi-billion market that can have a strong impact on the future health of customer premises solutions.

Cisco has been highly active in bringing to market Cloud-based collaboration services, beginning with its acquisition of Webex and continuing with such offerings as Webex Connect and Webex Mail. Cisco, though, is not the only major enterprise systems market player to ramp up its hosted solutions program, because virtually all of its major competitors are currently doing the same. Avaya kicked off the trend several years ago (though its offerings did not initially receive strong market acceptance at the time); more recent notable examples include Interactive Intelligence and Siemens Enterprise Communications. And even Microsoft is expected to announce availability of Communications Server 14 voice communications as part of its BPOS service within the next year.

It is very possible that a sizable percent of enterprise customer networks in the next few years will evolve to be a hybrid mix of premises and Cloud-based solutions for real-time communications services, in addition to peripheral applications such as messaging, contact center and conferencing/collaboration. Several factors work in favor of a subscription-based hosted services solution compared to a customer-owned premises solution, including: reduced capital and operational costs; the perennial acceleration of technological obsolescence that decreases the optimal life cycle of purchased products; and a downsizing of in-house IT resources in a depressed global economy (not likely to improve in the short term).