Cisco will acquire networking startup Meraki, boosting what the vendor offers for cloud-based management of wired and wireless infrastructure and leading to the creation of a new business group within the networking titan.
Rob Soderbery, general manager of Cisco's enterprise networking group, confirmed to CRN the deal was set at $US1.2 billion ($A1.15 billion) cash.
Soderbery said Cisco will use Meraki's management platform and products to go after SMB and midmarket customers seeking a cloud-based solution to networking.
Not only that, he said, but Cisco intends to lead with Meraki in that lucrative market segment, even though it has no plans to abandon the Cisco IOS-based products it has for the segment already.
"This provides us a new way to to serve our customers in the midmarket," Sodebery told CRN. "We felt the Meraki platform provided a simple, secure networking solution for these customers -- ideal for the SMB, and complementary to the feature-rich Cisco enterprise networking solutions.
"This is not just a single product, or technology, or talent acquisition. These guys have built a highly scalable, multitenant cloud service. This is a full, cloud-managed networking offer and we're embracing Meraki's entire strategy."
Founded in 2006 and based in San Francisco, Meraki began as a wireless LAN specialist, but in 2010 added network security appliances to its lineup and, earlier in 2012, further expanded into Ethernet switching. It was considered an IPO candidate, having taken in about $US80 million in venture funding in the past six years and growing its customer base to about 20,000 worldwide.
Meraki's hook is that its customers use the same hosted management software, set up and controlled using an Internet-accessible dashboard, for all of its various products. The company sells about 98 percent through solution providers and has more than 1,000 global partners.
Meraki will join Cisco as its new cloud networking group, Soderbery said, reporting up to Sujai Hajela, vice president and general manager, wireless networking business unit. Biswas will become vice president and general manager of that unit, and Meraki's full team will be preserved, and also remain in San Francisco.
"These guys are terrific entrepreneurs," Soderbery said. "We couldn't be more pleased to have them join the company."
Meraki technologies will be leveraged in Cisco's own, but Soderbery said the plan is not to take bits and pieces of it to build into Cisco's platforms. Cisco intends to preserve the Meraki platform as it's run now and lead with that solution for SMB and midmarket customers wanting cloud-managed networking and security appliances.
"Meraki has really optimised for a narrower set of features and capabilities," he said. "They've done a lot to reduce TCO. We will lead with Meraki for the midmarket."
Meraki declined comment to CRN.
Soderbery said Meraki has an attractive channel story, too.
"The channel's been an important part of their go-to-market," Soderbery said. "We intend to feed the channel go-to-market engine and intend to continue to execute on that."
Soderbery added that it was Cisco that sought out Meraki, and that many customers still weren't aware of what Meraki had done since garnering buzz as a cloud-managed wireless LAN company years ago.
"They have WAN acceleration, Layer 4-7 services, application firewalls -- this is a much richer platform than what people who might have looked at them in the past saw was there," he said. "They have 20,000 customers and more than 100,000 devices under management. We absolutely felt this was a strategic acquisition for Cisco."
Among the company's recent acquisitions have been NDS Group, vCider, ThinkSmart, Virtuata and Cloupia.