IBM Buys Web Conferencing Firm

SAN FRANCISCO -- IBM (IBM) moved on Wednesday to fill a gap in its product portfolio by buying a firm that provides Web conferences over the Internet.

IBM said it has acquired privately owned WebDialogs and will meld it into the company's software group. The deal gives IBM the technology it needs to build a videoconferencing option into its Lotus Notes suite of business programs. Lotus is IBM's most widely used software, with 135 million licenses worldwide.

The companies didn't disclose the financial terms of the deal.

IBM's acquisition underscores the growing interest in video services offered over the Internet. In May, networking giant Cisco Systems (CSCO) closed its acquisition of WebEx for roughly $3.2 billion.

Cisco has also developed its own videoconferencing technology called TelePresence, which Chief Executive John Chambers reportedly has in his game room at home.

In numerous public speeches, Chambers has touted video as the fastest-growing source of Internet traffic and demand for bandwidth.

Chambers' vision is to offer as many services as possible over the Internet and corporate networks that use Cisco's routers and servers.

For its part, IBM needs to bolster its software business to keep it relevant as upstarts such as WebEx and Google (GOOG) offer more services and features -- some for free -- over the Internet.