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Cisco Buys Andiamo Finally

Cisco Systems Inc. (Nasdaq: CSCO) has finally closed its acquisition of Andiamo Systems Inc., the "spin-in" startup that developed Cisco's MDS 9000 series SAN switches (see Cisco Wraps Up Andiamo Deal). Cisco's marking the official acquisition by putting its storage gear under the umbrella of its Internet Switching Business Unit.

To start at the top: Cisco has spent about $750 million in an all-stock transaction to complete its ownership of Andiamo -- a bargain, considering the company was prepared to go as high as $2.5 billion worth of Cisco shares (see Cisco Buys Andiamo).

Three years after Cisco's interest in Andiamo came to light (see Ciscos Secret SAN Strategies Revealed), and nearly two years after Cisco's first products were announced (see Cisco Announces Andiamo Switches and Cisco to Christen Andiamo Family), the switches developed by Andiamo are definitely a market Go. In Cisco's latest earnings report, the company claimed $40 million in revenues related to the MDS 9000 and boasted 540 customers for its storage group (see Cisco Storage Growing Up).

In addition, Cisco CEO John Chambers has earmarked storage networking as one of six "billion-dollar babies" in the Cisco product repertoire (see Storage: A Cisco Billion Dollar Play).

So Cisco's done the expected. What changes now? For one thing, Andiamo's official entry into the Cisco fold (it's been living on the Cisco campus since its inception) is marked by a change in Cisco's storage networking organization. Andiamo's 317 employees are joining Cisco's Internet Switching Business Unit (ISBU), the group that handles Cisco's Catalyst series switches, which is headed by senior VP Luca Cafiero.

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