Cisco To Acquire Meraki for $1.2B

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Cisco said Sunday that it has reached a $1.2 billion cash agreement to acquire Meraki, a San Francisco-based provider of networking systems that can be managed from the cloud.

Meraki's product lineup includes wireless LAN systems, security appliances, access switches and mobile device management tools. Cisco officials said the deal will strengthen the company's portfolio of cloud networking systems.

"The acquisition of Meraki enables Cisco to make simple, secure, cloud-managed networks available to our global customer base of mid-size businesses and enterprises," said Rod Soderbery, senior VP for Cisco's Enterprise Networking group, in a statement.

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"These companies have the same IT needs as larger organizations, but without the resources to integrate complex IT solutions. 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," said Soderbery.

Meraki was founded by several members of MIT's Laboratory for Computer Science. In a blog post, initial investor Doug Leone, of Sequoia Capital, said the company's wireless technology is groundbreaking.

"It gave upstart ISPs a way to enter new markets and disrupt existing ones. The benefits were obvious: the ability to scale without wires, low cost of entry, ease of use, and network analysis tools to help operators maximize revenue from their small networks," said Leone.

"Before Meraki if you got a call at 1 a.m. you'd have to go into the office, access a control panel and fix the issue yourself, or even travel to the location of the problem. With the webapp, network admins can log on via their browser and get a centralized view of all their deployments, right down to the device level," Leone wrote.

The deal comes as Cisco is increasing its investment in technologies that allow IT administrators to manage networks remotely and through the cloud.

At the Interop Conference and Expo in Las Vegas earlier this year, Cisco chief technology officer Padmasree Warrior said the company is rethinking its approach to the network.

In an age of what Warrior called "immersive collaboration," networks need to have visibility, awareness, security, agility, and manageability. One approach Cisco is taking to ensure its products embody such attributes is its adoption of the Software Defined Network (SDN). "We want everyone to think more holistically about SDN," said Warrior.

Cisco said Meraki's network management software boosts its SDN capabilities. The company expects the deal to close in the second quarter of its 2013 fiscal year. Cisco shares were up 1.06%, to $18.18, in morning trading Monday.

More than half of federal agencies are saving money with cloud computing, but security, compatibility, and skills present huge problems, according to our survey. Also in the Cloud Business Case issue of InformationWeek Government: President Obama's record on IT strategy is long on vision but short on results. (Free registration required.)