Financial terms of the deal have not been disclosed.

Billerica, Massachusetts-based WebDialogs develops audio and video conferencing software, which is delivered as a service over the Web, is used by half a million users worldwide to work and meet online.

WebDialogs is a white-label service provider, meaning that its business is performed on behalf of other companies reselling web conferencing services under their own brand.

The company will now be absorbed into IBM’s Lotus software division which sells a broad desktop and server-based collaboration suite, though not as a service over the Web.

IBM has pledge to add a software-as-a-service capability to its Sametime messaging software suite, which already offers web conferencing capabilities.

IBM said the buy will boost its offerings for small and mid-sized firms, a market also being targeted by Citrix Systems’ GoMeeting and GotoWebinar offerings.

Our View

IBM’s swoop for WebDialogs could be a response to rival Cisco System’s acquisition on WebEx, a similar web conferencing company, in May this year. But WebDialogs doesn’t necessary plug a functional gap in its Lotus suite. Lotus Sametime already has web conferencing built-in. What it does lack however is an online delivery capability. WebDialogs now gives users that option which will also open up possibilities in the SMB sector.

It will be interesting to see if IBM retains the WebDialogs brand and how it decides to position the software alongside Sametime. Partners will also be happy with another opportunity to partner with IBM as WebDialogs comes with a set of open APIs for custom development and integration.