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Elias Khnaser
Elias Khnaser
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Should Cisco Buy Citrix Or NetApp?

It's anybody's guess as to what Cisco's next acquisition will be, but here's why I'm betting on Citrix.

John Chambers made it quite clear last week that Cisco was not done making acquisitions and that the company has not made a sizeable acquisition in a long while. He also affirmed in so many words that he realizes Cisco has been a bit slower than expected in making acquisitions and in responding to market changes.

Chambers also signaled that all of that was going to change and change fast -- although he remained elusive as to what Cisco was going to acquire that would constitute "sizeable" in his mind. Now, of course, acquisitions at a company Cisco's size would have to fall in line with a certain vision it is trying to fulfill or a certain goal it is trying to reach. Not knowing that piece of information, all we can do is speculate as to what would make sense.

After Chambers' comments last week, Citrix Systems' stock price went up on speculation of a takeover. Today I want to look at some of Cisco's potential takeover targets and analyze each. I personally believe Cisco has two acquisition possibilities -- Citrix or NetApp -- and that either would be formidable pickups, but depending on the Cisco strategy one would be more suitable than the other.

[ Read Cisco To Acquire Meraki for $1.2B. ]

Let's start with NetApp -- what would Cisco gain from a NetApp pickup? Although it likes to think of itself as a software company and it makes good software, NetApp's business is infrastructure. If Cisco is trying to own a piece of the storage market, NetApp is the last of the independents out there that is truly enterprise scale. This acquisition would enable Cisco to own the stack of compute, network and storage, and with its broad partnerships, NetApp has the virtualization stack well covered as well. Cisco would not need NetApp for its customers as it already has those customers, many of them as FlexPodusers.

What I'm not sure about is whether IBM would allow a NetApp acquisition, given that it sells quite a bit of N-series. Would we see an HP or Dell type fight for NetApp? I wouldn't bet on it -- IBM's contracts are grandfathered in and to IBM the acquisition would not change much. It would benefit Cisco, however, to have a footprint in some IBM strongholds assuming it doesn't already exist there.

To sum up, I think a NetApp acquisition would be of limited benefit to Cisco, especially at the price it would have to pay. It would not be my first choice for sure.

Citrix, on the other hand, is truly an interesting acquisition play for Cisco, at a market cap of about $12 billion. Citrix presents a market opportunity for Cisco on many different fronts. It's no secret that Cisco never did a great job at software; with a Citrix acquisition this concern would be laid to rest forever. Although Citrix is present in many enterprises, it has nowhere near the coverage that Cisco has, which means that Cisco could potentially grow the Citrix portfolio and grow its market capabilities especially in the mobility space, which is near and dear to Cisco's heart. Citrix also is not a very partner-friendly company as evidenced by the fact that it does not even make the list of top 20 on the CRN's 2012 best companies to partner with. Cisco on the other hand is very partner friendly; that alone could move the market and create immediate value.

Citrix also recently acquired Zenprise, and Cisco definitely needs an mobile device management offering to augment Cisco ISE. With a Citrix acquisition it could kill two birds with one stone. Zenprise already integrates very nicely into Cisco ISE anyway. In addition to all of the above, Cisco would also get XenServer, a hypervisor that is popular with large cloud providers and service providers in general; that would allow it to have control over its software defined network.

The collaboration portfoliothat Citrix would bring to the table is also impressive -- complimentary in some regards, overlapping in others. A Citrix acquisition would also bring a very tight relationship with Microsoft and some interesting synergies and partnering capacities. Not to mention that a Citrix acquisition will also be looked upon more easily by EMC and VMware than a NetApp acquisition, which would put EMC and Cisco in head-to-head competition immediately.

Citrix also has a hidden lethal weapon: its acquisition of Bytemobile, a company with a technology to optimize carrier networks for mobility. Once Citrix optimizes its flagship remote desktop protocol ICA/HDX for seamless optimization with Bytemobile, its offering is very alluring. To make things even more interesting, Cisco and Citrix are already collaborating on the NetScaler product and Cisco could probably integrate the Citrix Branch Repeater into its WAAS solution and offer ICA/HDX capabilities that it currently does not have. Like I said, Citrix makes for a really interesting acquisition.

If we eliminate Citrix from acquisition contention, then I would be in favor of a NetApp acquisition and an MDM acquisition. Plenty of good options are out there, including OpenPeak, AirWatch, MobileIron and others.

Whatever a "sizeable" acquisition for Cisco winds up being, it will surely transform Cisco and our industry. What do you think? I look forward to your feedback!

Join Cloud Connect for a free webcast with "Cloudonomics" author Joe Weinman. Cloudonomics is a new way to discuss the benefits of private clouds. Many have focused on the cost reduction possibilities while others have focused on business agility. However, private clouds can play a strategic role, as well. The Cloudonomics webcast happens Dec. 12. (Free registration required.)

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Sam Iam
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Sam Iam,
User Rank: Apprentice
12/21/2012 | 6:40:36 PM
re: Should Cisco Buy Citrix Or NetApp?
Agree, I think Citrix would make the most sense. They have a solid set of products, but generally do not even get a look because of VMware's presence in the virtualization space. Cisco would be able to at least get them in the door. Cisco almost needs to buy a VM company because VMware/EMC will likely be coming after their networking space with Nicira as soon as they have it integrated into VSphere. They need something with which to combat VMware/EMC.

I don't follow the NetApp angle, other than they are the largest storage provider that Cisco can afford and Cisco already partners with them. They are not a true tier one SAN player that could compete with the likes of EMC and IBM. NetApp is basically a filer which has a SAN emulation layer on top of WAFL. It starts to have issues when it scales because of the WAFL overhead. It is solid filer, but not designed for SAN and not designed for tier one performance or scale. It is really a niche player, but file storage is a big niche. I would think Cisco would want to buy a company with a more complete storage portfolio if they were going to move against EMC... but who knows.
PJS880
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PJS880,
User Rank: Apprentice
12/17/2012 | 7:11:51 PM
re: Should Cisco Buy Citrix Or NetApp?
This would be a very smart move o Cisco's part, Citrix just acquired ZenPrise, nothing but getting better an expansion and it also gives Cisco a larger chunk in the IT industry. I would push going towards Citrix if I was on the board at Cisco. I trust Cisco in the end will make the best choice based on what exactly they will be getting out of the acquisitions and also which one will allow for even further expansion.

Paul Sprague
InformationWeek Contributor
Leo Regulus
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Leo Regulus,
User Rank: Apprentice
12/12/2012 | 8:49:19 PM
re: Should Cisco Buy Citrix Or NetApp?
If something 'has' to happen here, Citrix should should do a takeover on Cisco. Citrix rates a 10+ in my book. While Cisco is on the positive side of '5', coming under the purview of Citrix may significantly enhance their 'lot'.
sbulfer
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sbulfer,
User Rank: Apprentice
12/12/2012 | 12:13:11 AM
re: Should Cisco Buy Citrix Or NetApp?
Both of these acquisition targets are well respected companies providing customer value. The challenge with both of them is they each have a legacy (one in infrastructure [NetApp] and the other in software [Citrix])...the challenge is that legacy and roots make it difficult for either to rapidly transform through organic growth, R&D, or acquisition to meet the needs of the new set of mobile requirements for productivity in the enterprise. If you look at either option, it is truly mobile at the crux of this puzzle. Aside from the cross fire that would be created in competition for one vs. the other, both are pushing hard in different ways to capture - or should I say even address the unique needs of the mobile enterprise user and their IT counterpart (aka godfather). This has created a huge opportunity for Mobile Information Management firms such as ionGrid, who address all of the needs for both the end-user and the IT management and has risen to a global leadership position overnight across 7 industries, in more than 20 countries, and engaged with more than 100 Global 200 firms and more than 50 Fortune 500 firms. Others were mentioned above in the article for acquisition "OpenPeak, AirWatch, MobileIron and others.", all respectable firms - however each falling short of the strategy and technology to address enterprise mobile requirements across the Fortune 500 or Global 2000. We would be happy to share a deeper perspective if interested - please visit us at ionGrid.com.
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