Cisco May Be Breaking Up Microsoft's Relationship With A Vital Cloud Partner

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Photo: AP

Cisco just bought a small stake in Parallels, a small company best known for its software that runs Windows apps on a Mac.And that just complicated things for Microsoft, which has grown closer to Parallels as it seeks to grab more customers for Office 365, the cloud version of its popular productivity and communications suite.

Cisco doesn’t make word-processing or spreadsheet software, but it competes with Microsoft’s collaboration and messaging applications like Lync Online, one of the apps included in Office 365.

Meanwhile, Parallels has been systematically installing former Microsoft execs at its helm, including CEO Birger Steen, marketing exec John Zanni, and others. That poaching hasn’t hurt the relationship. If anything, the companies have grown closer—literally. Parallels recently moved its US headquarters from Herndon, Va., to Seattle, Wash., near Microsoft.

That’s because Parallels offers software that helps service providers sell Office 365 contracts.

While Cisco and Microsoft were once close partners, their relationship has devolved over the years as Microsoft moved into Cisco’s videoconferencing turf.  Cisco tried to block Microsoft’s purchase of Skype, and continues to try and get the government to intervene and force Skype to adopt technology Cisco favours, so Cisco can reach Skype users.

Lync Online is a Web conferencing service that competes with Cisco’s WebEx.

With this stake, Cisco gets inside skinny into a lot of Microsoft’s Office 365 partner’s operations. It maybe even gets the ability to derail some of those Office 365 contracts.

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