Cisco today said it plans to acquire Viptela, a pioneer in the hot software-defined WAN market. The networking giant said it will pay $610 million in cash and assume equity awards for the San Jose-based startup.
Founded in 2012 by former executives from Cisco, Juniper, Alcatel-Lucent and VMware, Viptela was one of the early players in the SD-WAN space. The Gap is among its notable customers and it counts Verizon and Singtel among its carrier partners.
Cisco said Viptela's SD-WAN focuses on simplicity and its cloud-first approach aligns with Cisco's Digital Network Architecture, a software-centric strategy it rolled out a little over a year ago. "With Viptela and Cisco, we will be able to deliver a comprehensive portfolio of comprehensive on-premises, hybrid, and cloud-based SD-WAN solutions," Scott Harrell, senior VP of product management for the Cisco Enterprise Networking Group, said in a prepared statement.
Even with the acquisition, Cisco said it will continue to develop its own SD-WAN technologies: Intelligent WAN (IWAN) for on-premises SD-WAN and the cloud-based Meraki service. "Acquiring Viptela will enable us to expand our portfolio, with increased functionality delivered through the cloud," Rob Salvagno, VP of corporate business development at Cisco, wrote in a blog post.
But some experts have said Cisco's IWAN fell short as an SD-WAN solution. In a blog post earlier this year, Tom Hollingsworth, organizer of Tech Field Day and an Interop ITX Review Board member, argued that Cisco hadn't captured the SD-WAN market because IWAN isn't really SD-WAN, but rather a series of technologies cobbled together.
Scott Raynovich, principal analyst at Futuriom Research, tweeted today that Cisco's acquisition of Viptela makes "total sense and also is an admission that IWAN wasn't good enough."
Shamus McGillicuddy, senior analyst at Enterprise Management Associates, told me in an email that based on its number of partnerships and customer wins, Viptela is probably "the most visible and successful of the SD-WAN startups today.
"Cisco, on the other hand, has struggled somewhat with SD-WAN. It had two separate SD-WAN solutions already in place: IWAN and Meraki. Meraki is more of a cloud-managed, secure branch gateway solution with limited capabilities around advanced traffic steering and other advanced features. But it is a highly successful business," he wrote.
"IWAN has a lot of high-end functionality, such as performance routing and advanced QoS capabilities, but it’s just too complex, even with the roll out of APIC-EM as the management and control piece," McGillicuddy added. "I’ve talked to service providers that have struggled to productize it as a service due to its complexity. IWAN lacked the ease of use and agility that characterizes many SD-WAN solutions. In other words, it lacked the 'software-defined' piece. Viptela gives Cisco that piece."
Cisco will need to explain clearly how it Viptela, IWAN and Meraki fit together, he said.
The deal is expected to close in the second half of this year. The Viptela team will join Cisco's enterprise routing team in its networking and security business unit.
Experts have said SD-WAN is hot because it addresses a pain point for many enterprises – the WAN. SD-WAN technologies streamline WAN configuration and management and can reduce WAN costs by enabling a mix of WAN links and reducing reliance on expensive MPLS links. IDC has forecast the SD-WAN market will reach $6 billion in 2020.
Other SD-WAN players include VeloCloud, Cloud Genix, Riverbed, and Talari Networks.