Cisco bolsters cloud with Meraki

News Nov 19, 2012

Cisco to acquire cloud networking firm Meraki in move towards software-centric model

Cisco (NASDAQ:CSCO) is further shoring up its cloud portfolio with the acquisition of US cloud networking specialist Meraki for $1.2bn (£750m).

This is the second purchase that Cisco has announced in the past few days. Last week, it agreed a $125m deal to acquire Cloupia, a firm that specialises in datacentre management.

Cisco says the acquisition of privately-held Meraki will enable it to “offer more software-centric solutions to simplify network management, help customers empower mobile workforces, and generate new revenue opportunities for partners.”

Meraki, which was founded by members of MIT’s Laboratory for Computer Science, technology offers customers Wi-Fi, switching, security and mobile device management centrally managed from the cloud. It will form the basis of a new division within the company known as the Cloud Networking Group.

“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 organisations, but without the resources to integrate complex IT solutions,” commented Rob Soderbery, senior vice president, Cisco Enterprise Networking Group in a statement.

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

Matthew Ball, director of enterprise services at channel analysis firm Canalys says the acquisition is in line with where Cisco is trying to take its channel engagement around the cloud, and in particular, managed services. He describes Meraki’s management of networks via the cloud as “an innovative approach to the market”.

He says: “It’s an opportunity for channel partners to build a managed service proposition. Meraki is more than just WiFi – it’s software, security and Mobile Device Management – it could be really attractive proposition for Cisco’s partners to target midmarket customers.”

He adds: “$1.2bn quite an investment; Cisco wouldn’t be spending the money unless it was convinced could transform the business – or keep the business evolving. Depending on how Cisco integrates the technology, it’s a good move.”

“Cisco has long run a service / support offering where it back ends the service channel as a second line / white label to deal with more complex customer support issues,” says Freeform Dynamics’ Tony Lock.

“If Cisco plans to use this acquisition in the same way it could be very good for channel. If Cisco wants to go more direct, and I have no indication that it does, then it could be a problem. But I believe that most businesses will always want to buy from channel partners, certainly not direct from the web. Thus this is an interesting acquisition that could play well to the channel provided there is good multi-tenancy in the solution.”

Adam Jarvis, chief executive of Meraki partner Intrinsic Technology says it’s “great” to see a major vendor prioritising cloud services: “Cisco’s ‘Cloud Networking Group’ vision sits very tightly with our own view of where enterprise IT is heading, and the commitment to preserving Meraki’s focus on customer experience is reassuring.

“We were one of Meraki’s first strategic partners in the UK and we’re looking forward to that relationship of innovation continuing.”

Cloud Distribution is UK distributor for Meraki. Managing director Scott Dobson told Channel Pro that right now it's “business as usual.”

He said: “The deal hasn’t happened yet, Cisco has announced its intent and all of the details around the deal are still being finalised. I think this presents a great opportunity to continue to grow the Meraki business in the UK.”

The acquisition is expected to close in the second quarter of Cisco’s fiscal year 2013, subject to customary closing conditions.

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