Cisco targets small to mid-market with cloud networking acquisition

Cisco plans to boost its cloud networking capabilities with the acquisition of the San Francisco-based firm Meraki for $1.2bn.

The cash deal, expected to close in the second quarter of Cisco’s fiscal year 2013, gives Cisco access to a host of wireless networking tools and, perhaps more importantly, a route into the rapidly growing small to mid-sized market that Cisco has so far struggled to grab a share of.

Meraki, a Google-backed company founded in 2006, employs around 330 people. It provides Wi-Fi, switching, security and mobile device management centrally managed from the cloud. It’s an attractive package for small to mid-sized organisations as it gives them the ability to run their own cloud network without the need to invest in a large IT department.

This is the second cloud-related acquisition made by the firm in the last few days, following the purchase of cloud management software firm Cloupia.

The deal is somewhat expensive in the eyes of some industry commentators, but allows Cisco to move into a more rounded position in the cloud market.

“The acquisition of Meraki enables Cisco to make simple, secure, cloud managed networks available to our global customer base of mid-sized businesses and enterprises. These companies have the same IT needs as larger organizations, but without the resources to integrate complex IT solutions,” said Rob Soderbery, senior vice president, Cisco Enterprise Networking Group.

“Meraki’s solution was built from the ground up optimized for cloud, with tremendous scale, and is already in use by thousands of customers to manage hundreds of thousands of devices.”

In an FAQ and letter to employees, Meraki’s CEO Sanjit Biswas described how his team initially rejected Cisco’s offer. “Our initial reaction was to politely say ‘thanks, but we’re planning to do our own thing and take Meraki public’,” he wrote.

“After several weeks of consideration, we decided late last week that joining Cisco was the right path for Meraki, and will help us achieve our goal of having maximum impact. As founders, all three of us plan to stay on as leaders of the business unit and look forward to continue towards our goal of $1B in annual revenue.”


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