WebEx: Price Check

By Baselinemag  |  Posted 2006-03-06 Email Print this article Print
 
 
 
 
 
 
 

WebEx Communications has the "Cadillac tool" of the industry, say some; others have been annoyed with its pricing policies.

WebEx turned its early start in the Web conferencing arena into a lucrative $300 million business last year. Some customers say it offers the Cadillac of the industry—but others ding the online-meeting king for having had inflexible pricing policies.

Marriott International found WebEx unwilling to negotiate pricing when the hotel chain was evaluating providers in 2003, according to Tom Maguire, director of Marriott's remote events division. "They said, 'This is the price per seat—take it or leave it,'" he says. Marriott picked Genesys Conferencing instead. WebEx says it has since revised its price plans and now offers a per-minute option. "Two years back, our pricing was not as flexible," says Praful Shah, vice president of strategic communications. "We learned that we need to provide different plans."

Still, pricing issues remain. American Built Containment Systems, a custom-packaging dealer in Cleveland, recently asked WebEx to cut its contract from 5,000 minutes per month to 2,500. But when David Marinac, the company's president, got his next bill, it hadn't changed. WebEx sorted out the problem only after Marinac spoke with a senior sales manager. "I had to go up the chain, which I thought was B.S.," he says. (WebEx's Shah says this sounds like an isolated case: "Sometimes, I'm sure we make billing errors.")

Others, though, have found WebEx quite accommodating. Insurance provider Securian Financial Group last year changed from per-minute pricing with WebEx to a 625-user license for unlimited meeting time—cutting its monthly bill more than 66%. "We've had great success moving with them on pricing plans," says Michelle J. Brennan, professional development consultant at Securian.

Barbara Maaskant, CIO of Emory University's Goizueta Business School, also renegotiated her pricing with WebEx, but declined to detail the terms. While WebEx is "the Cadillac tool" in Web conferencing, she says, "I think WebEx is becoming cognizant that there are very viable competitors."

Still, you get what you pay for, says Dion Tsourides, director of North American technical support for Spectro Analytical Instruments, which sells testing equipment. He says WebEx has excellent infrastructure and customer support not just in the U.S., but also in Europe and Hong Kong—a key factor for Spectro, which has customers worldwide. And pricing? It's fair, Tsourides says: "A few hundred bucks here and there isn't going to make us switch to somebody else."

Web Conferencing

WebEx Communications
3979 Freedom Circle
Santa Clara, CA 95054
(408) 435-7000
www.webex.com

TICKER: WEBX (NASDAQ)
EMPLOYEES: 2,000

Subrah S. Iyar
Chairman & CEO
Before co-founding the company in 1996, he worked at various information-technology companies, including Apple Computer and Intel.

Bill Heil
President & COO
Joined WebEx in November 2004. Previously, he was general manager of the high-end servers group at Compaq Computer (prior to its acquisition by Hewlett-Packard) and was general manager of the company's Tandem division.

SERVICES
WebEx Meeting Center provides Web-based presentation tools, file and application sharing, text chat, a virtual whiteboard and other interactive features. WebEx Training Center is tailored for delivering either prerecorded or live training sessions.
Reference Checks

GMAC Commercial Mortgage
Sandra Morris
VP, Learning and Employee Development
(215) 328-1922
Project: Provider of commercial mortgage banking services uses WebEx for new-employee orientation and ongoing training of 3,000 workers.

Securian Financial Group
Michelle J. Brennan
Professional Development Consultant
michelle.brennan@securian.com
Project: Insurance provider trains 1,200 independent financial advisers on products and software with WebEx conferences.

American Built Containment Systems
David Marinac
President
dmarinac@abc-packaging.com
Project: Custom-packaging dealer in Cleveland uses WebEx meetings for sales pitches.

Goizueta Business School
Barbara Maaskant
CIO
barbara_maaskant@bus.emory.edu
Project: Business school at Atlanta's Emory University lets 600 students collaborate on case-study projects with WebEx meetings.

Spectro Analytical Instruments
Dion Tsourides
Dir., North American Technical Support
dion@spectro.com
Project: Maker of scientific testing instruments provides technical support to customers and also conducts training sessions using WebEx conferences.

Texas Instruments
Marshall Woolard
Mgr., Collaboration Team
mw2@ti.com
Project: Chip maker based in Dallas held 6 million minutes of WebEx meetings in 2005 for both internal teams and with external partners.

Executives listed here are all users of WebEx's services. Their willingness to talk has been confirmed by Baseline.

WEBEX OPERATING RESULTS*
2005 2004 2003
Revenue $308.42M $249.13M $189.34M
Gross margin 82.4% 83.2% 83.2%
Operating income $79.57M $69.46M $43.10M
Net income $52.74M $47.88M $59.80M
Net margin 17.1% 19.2% <31.6%/td>
Earnings per share $1.10 $1.03 $1.37
R&D expenditure $45.71M $34.34M $24.77M
Sales and marketing $102.71M $84.19M $74.25M

OTHER FINANCIALS**

Total assets $362.78M
Stockholders' equity $311.77M
Cash and equivalents $68.42M
Short-term investments $128.80M
Long-term debt None
Shares outstanding 47.80M
Market value, 2/22 $1.29B
**As of Dec. 31, 2005, except as noted


 
 
 
 
 
 
 
 
 
 

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