Cisco to acquire Meraki for $1.2bn
Payday for Google as Cisco establishes cloud networks division
Cisco has acquired cloud rival Meraki.
Meraki attracted much attention in around 2006, thanks to Google investing in the then-startup and its products that made it possible to dole out a few megabytes of free WiFi from its access points. That functionality was popular among early adopters who liked the idea of free WiFi and were willing to share their own connections with passing strangers.
Google stumped up some cash to make that happen, as in pre-iPhone 2006 it made sense to make it as easy as possible to get online.
Meraki has since added many other enterprise networking products and now offers switches, security appliances and WiFi kit, all managed through a web-based interface and some cloudy goodness said to make network admins' lives simpler and happier.
Tech Crunch reports Cisco will pay $US1.2bn, all in cash, to get its hands on the company.
Meraki has posted an FAQ about the transaction, including a letter from CEO Sanjit Biswas in which he says Cisco wants the company to become "a new 'Cloud Networking Group'," and that he and other Meraki founders intend to stay aboard and plan to turn the group into a billion-a-year concern.
Biswas also reveals that Cisco decided to strike before Meraki could go public. Meraki did not immediately accept the offer, instead pausing to consider if it was the best path to take for its technologies and people.
The company decided it was after being assured Cisco would "like to see us continue to release new features and products in the years ahead, and hopefully 'cloudify' other Cisco products." The networking giant also promised Meraki's "highly integrated and customer experience focused" modus operandi would be preserved after an acquisition.
Cisco's Romanski confirmed the intended acquisition in a saccharine blog post that proclaimed "Meraki built a unique cloud-based business from the ground up that addresses the broader networking shift towards cloud" and added the deal represents "another example of Cisco’s focus on accelerating our adoption of software based business models."
The acquisition is Cisco's second cloudy purchase inside a week: last Friday it hoovered up Cloupia, a maker of cloud management software. CEO John Chambers also recently said the company will soon make small telephony cells, in part to help its WiFi business. ®
strategic alliance director, EMEA at Enterasys Networks
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.
Next on the shopping list...
... a Virtualisation hypervisor.
If EMC are rumoured to be in discussion with Juniper to bring their networking for VMWare more in house, it makes sense for Cisco to look for a Virtualisation "partner" to consume. Citrix is probably the best fit, and within budget.
Another interesting set of products soon to be dragged down to Cisco's mediocre levels. Shame.