Cisco to buy cloud network management company

 

Cisco Systems Inc. is buying a maker of a cloud-based network management system for US$1.2 billion.

San Francisco-based Meraki Inc., which confirmed the deal Sunday, makes WiFi access points, switches, security appliances and mobile device management solutions like Cisco. But its differentiator is a so-called controller-less cloud-based central management system that allows IT administrators to oversee the devices from anywhere.

Unlike similar Web-based management solutions from competitors, the Merkai solution doesn’t reside on premise.

In the opinion of Zeus Kerravala, principle analyst at ZK Research, that’s what Cisco wants, as opposed to Meraki’s hardware products. One proof: Once regulatory approvals are cleared Meraki will become Cisco’s new Cloud Networking Group.

“There is an audience for a controller-less solution,” he said, noting they are offered by WiFi access point makers companies such as Aruba Networks and Aerohive. Cisco doesn’t have a product to match, he said.

But he suspects what makes Meraki appealing is that its cloud solution manages all of the company’s networking products, not just access points.

“Cisco didn’t have the front end to manage a cloud network,” Kerravala said. “They had the back end with onePK [part of its recently-announced software-defined networking strategy]. What Meraki gives them is a great front-end tool. If they can marry that with one PK they can change Cisco to be able to offer a truly cloud-managed network.

“That I’m sure has great appeal to their telco, their resller partners, their system integrator partners.”

Meraki is a six-year old company has about 330 employees.

In a statement Cisco said “the acquisition of Meraki complements and expands Cisco’s strategy to offer more software-centric solutions to simplify network management, help customers empower mobile workforces, and generate new revenue opportunities for partners.’

A statement on Meraki’s Web site says “Cisco sees us delivering a lot of value to mid-market customers, while also enhancing their enterprise network offering.”

The statement also says Meraki’s licence terms, support and SLAs won’t change.

In an online letter to employees Meraki CEO Sanjit Biswas said the deal was an “unexpected event.”

When Cisco made an offer a few weeks ago, “our initial reaction was to politely say ‘thanks, but we’re planning to do our own thing and take Meraki public,’” Biswas said.

But Cisco made “a very significant offer,” as well as offered to take Meraki’s technology global.

Cisco wants Meraki staff to continue to release new features and products, as well as “hopefully ‘cloudify’ other Cisco products, Biswas wrote.



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