If you're a Microsoft shareholder, you automatically take notice whenever you hear about a company wanting to get in on Microsoft's Office action. That's because, in addition to the Windows operating-system franchise, Office is a great killer app for Microsoft. It brings in a ton of cash.

Personally, I don't think you need to dump your long-term Microsoft position over this news. It's hard to imagine Office suddenly going the way of the dinosaur, no matter what entity launches an attack. Google (NASDAQ: GOOG) Docs certainly didn't destroy Office.

I think Cisco's management is making a smart enough move, though. While displacing Office's dominance is presumably not their overriding objective, putting some money behind WebEx should serve a worthwhile purpose.

Microsoft obviously is watching this development, and I'm sure it is being interpreted as yet another signal of the future of software applications. As time goes on, competent web strategies and viable subscription models will need to be in place to adequately capture the demand for Internet collaboration, especially when it comes to businesses both big and small.

Microsoft is trying to improve its standing when it comes to web applications. In fact, we've all heard about Bing. We'll have to wait and see exactly how well the search engine (or am I supposed to write decision engine?) will fare, but Microsoft definitely wants to become a bigger player in cyberspace, and it will do what it can to build as much equity as possible in the minds of surfers. Of course, Microsoft still has a good thing going with its disc-based desktop software. There will still be a market for such products for a long time to come. I, for one, enjoy buying boxed software that has to be installed.

As for the stocks themselves, I think both Cisco and Microsoft would be better ideas on dips in share price. I am more partial to Microsoft than Cisco, and do agree that it may be cheap. Steven Halpern recently highlighted analyst commentary that makes this point. Microsoft has had such a run, though, that I would be particularly careful about the buy price.

Disclosure: I don't own any company mentioned; positions can change without notice.