Cisco Acquires Cloud Networking Vendor Meraki for $1.2 Billion
Cisco is making a big play to expand its footprint in the networking midmarket with the $1.2 Billion acquisition of privately held Meraki. Meraki will form the new cloud networking group at Cisco.
Meraki builds cloud managed wireless and wired access points as well as providing network acceleration and security capabilities. Meraki's hardware appliances are based on a hardened Linux operating system and includes a subscription based service for cloud management.
Rob Soderbery, senior vice president of Cisco's Enterprise Networking Group said during a Monday morning conference call that the Meraki acquisition moves Cisco further into the cloud and advances the company's position in the midmarket.
He added that Cisco has been doing well in the wireless market so far, as shown by the company's first quarter fiscal 2013 wireless revenue growth of 38 percent. The addition of Meraki is intended to be complementary, by going after the networking midmarket in a way that Cisco has not done to date.
Meraki has over 20,000 customer networks currently deployed and according to Soderbery, the majority of those customers are not Cisco customers today. He noted that the midmarket is important to Cisco, but the company has not been fully optimized with solutions for the unique needs of that space. Meraki on the other hand, is optimized with the features and capabilities that are in high demand for the midmarket and deliver them in a simple to easy use form factor that is cloud delivered.
Soderbery defined the midmarket sweet spot that Merkai is in as the 1,000 person company, that has networking needs by only a handful of IT people. He stressed that Meraki is not positioned as a solution that is intended for larger enterprises and it does not compete with Cisco's existing wired or wireless portfolio in that regard.
Cisco has a product called the Identity Services Engine (ISE)that debuted in 2011 as a central policy engine for wired and wireless networks. Soderbery sees the Meraki solution as being complementary and he stressed that it is targeted at the midmarket and not at deployments where there are millions of clients.
Soderbery also sees a connection between Meraki and the current trend toward Software Defined Networking (SDN).
"Software Defined Networking is all about making the network simpler and more programmable," Soderbery said. "In that regard it's the same thing that Meraki does, but they have been taking a different approach then what has been talked about by the OpenFlow community in SDN today."
Soderbery noted that Meraki provides complete management of wired and wireless networking assets from the cloud. The system is simple and easy to use and deploy while giving midmarket customers a complete set of capabilities.
"It very much provides the same kinds of capabilities and easy of use and network programmability," Soderbary said. "We think that for a midmarket that really has relatively little interest in how networks are built and just wants to easily consume the network, this is an ideal solution."