Cisco is to pay $1.2 billion (£750 million) for Meraki, a firm which offers control of Wi-Fi equipment and other network kit over the cloud.
Meraki’s seemingly simple offering is important to Cisco as it allows small and medium-sized businesses to run networks without large IT departments.
Meraki, a six-year-old firm, sells network hardware including wireless access points and switches, but has majored on making all its equipment manageable over the cloud through a simple web interface. It will keep its own identity within Cisco, becoming part of the Cloud Networking Group, which will offer simple on-premise networks to SMB companies and will include “bring your own device” (BYOD) management, as well as Wi-Fi and wired network offerings.
The acquisition follows the $125 million purchase of Cloupia, which also offers network management software, but for large virtualised data centres.
Meraki was founded by members of MIT’s computer science lab, and has had backing from Google. Its initial focus was entirely on Wi-Fi, where it offered wireless access points that could be managed remotely, and competed against other cloud-based Wi-Fi firms such as Aerohive which, like Meraki, also has ambitions to manage wired networks.
“When compared to other opportunities, Meraki built a unique cloud-based business from the ground up that addresses the broader networking shift towards cloud, not just within wireless,” read a blog post from Hilton Romanski, Cisco’s head of corporate business development.
“Meraki created a massively scalable architecture that offers easy to deploy, secure, and manage networks. They didn’t obsess about the number of features, but instead focused on those that could be simplified or removed entirely.”
Meraki has around 20,000 customers, a turnover of $20 million in the most recent quarter, and got there with a total of $80 million in venture capital funding over its six-year existence, according to TechCrunch, which suggested that early investors like Google, Felicis Ventures and Sequoia might now get a decent return.
“The acquisition of Meraki enables Cisco to make simple, secure, cloud-managed networks available to our global customer base of midsized businesses and enterprises,” added Rob Soderbery, vice president of Cisco Enterprise Networking Group. “These companies have the same IT needs as larger organisations, but without the resources to integrate complex IT solutions.”
The deal should be closed by the end of January.
Originally published on eWeek.
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Cisco has been extremely busy on the acquisition trail recently and it certainly has the cash reserves, but simply acquiring technology does not guarantee future success.
One of the major issues following any acquisition is the effective integration of the acquired company and its personnel into the purchasing company’s R&D and general business processes. With the Meraki acquisition there is absolutely some significant product overlap and it will be interesting to see how Cisco manages this, especially with the added disruption following four other recent acquisitions.
It will also be intriguing to see how this impacts existing Meraki customers, specifically from a customer support perspective. Meraki has a similarity with my own company Enterasys, in that it prides itself on its customer support and satisfaction, its ability to respond quickly to virtually any type of request, this is in stark contrast to the way Cisco works. Being such a behemoth of a company leads to a very laborious and process driven response mechanism to customer feature requests and resolution to problems, the complete opposite to what Meraki customers experience.
For Cisco this is obviously one step closer to providing cloud managed services, no doubt there will be others, its unlikely that the Meraki and Cisco WLAN solutions will both remain intact, but I guess only time will tell.