Cisco Picks Up PostPath for $215M

Cisco has announced its intent to acquire email management specialist PostPath for $215 million, outlining its plans to turn the startups technology into software as a service (SaaS).

PostPath, which is a former Byte and Switch top 10 startup, touts Linux-based software that can be dropped into a Microsoft network and works like an Exchange server. By using a Linux file system instead of Microsoft’s database, the vendor pushes its PostPath Server software as a faster backup alternative to Exchange.

The startup, which was founded in 2003, also sells email archiving software, and recently partnered with VMware to virtualize corporate email.

“We believe that the time is right to move these applications to a Software-as-a-Service (SaaS) model,” said Alex Hadden-Boyd, director of marketing for Cisco’s WebEx division, during a webcast earlier today, but did not divulge specifics. “We can look forward to more details in the coming months."

The PostPath follows a string of SaaS-related acquisitions by Cisco, such as last year’s $100 million for storage specialist Securent and Cisco already offers a host of technologies such as instant messaging and document management as a service, and is clearly keen to tap into the growing demand for storing and managing emails with its PostPath deal.

There has already been a flurry of activity in the hosted email market, with Dell snapping up MessageOne for $155 million and Google shelling out $625 million for Postini last summer. More recently, SaaS specialist Proofpoint picked up email vendor Fortiva for an undisclosed fee.

Cisco was clearly more interested in PostPath’s technology than it was in the vendor’s customer list. At the start of last year, the startup claimed fewer than 10 paying customers, although PostPath’s growing reputation as "the Exchange Buster" had nonetheless garnered some $30 million in VC funding.

PostPath, which competes with Mirapoint, IPswitch, and Scalix, also claimed to have received its first orders from Fortune 500 companies earlier this year.

Based in Mountain View, Calif., PostPath also has an R&D facility in Sofia, Bulgaria. Cisco said it intends to keep the company’s workforce, including CEO Duncan Greatwood.”PostPath’s 67 employees will be joining WebEx in the collaboration software group within Cisco upon completion of the acquisition, said Hadden-Boyd, during today’s webcast. “We expect the deal to close at the end of this quarter.”

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