Cisco's Security Spree Continues

Today Cisco Systems Inc. announced a $39 million deal to acquire Riverhead Networks, which specializes in combating distributed denial-of-service (DDOS) attacks like the Mydoom virus. These can wreak havoc on network and data center resources.

The deal reflects a flurry of activity in the specialized security market, where Cisco and other router vendors have made several moves. Cisco's rival in the IP router space, Juniper Networks Inc. (Nasdaq: JNPR), has also taken an interest in security, having recently anted up $4 billion for NetScreen Technologies Inc. (Nasdaq: NSCN) (see Juniper Buys NetScreen). Cisco itself has focused on a series of smaller deals that IT managers hope will result in better security, given Cisco's influential role in data networking.

Industry observers had originally speculated that Cisco was in the market for acquiring Arbor Networks Inc., which is one of Riverheads main competitors (see Will Cisco Buy Arbor Next?).

Charles Kolodgy, research director at analyst firm IDC

says, “So many companies now route everything through the data center, so you can attack the whole area by taking the data center down. You have to protect it from DDOS attacks.”

Kolodgy adds that the acquisition spells good news for Cisco users. “Cisco is already a leader in network security products, and buying up firms makes their products stronger -- they are getting technology.”Riverhead’s products protect online operations from DDOS attacks by detecting and blocking malicious traffic without impinging on legitimate business transactions.

In January, Riverhead unveiled two new products -- the Riverhead Guard XT and the Riverhead Detector XT -- which aim to provide protection against the most sophisticated DDOS attacks. The Detector XT monitors traffic flows and alerts Guard XT, which diverts traffic addressed to the target (see Riverhead Unveils Anti-DDOS Stuff).

There has been growing speculation recently over which security companies were next on Cisco’s shopping list, as the equipment giant focuses on expanding its intrusion detection and protection product portfolio.

The company snapped up Psionic Technologies Inc. in December 2002 and completed the buy-out of network security software firm Okena last year (see Cisco Buys Psionic and Cisco Completes Okena Buy).

More recently, Cisco announced plans to buy security software vendor Twingo Systems Inc. for $5 million in cash, a move that is also expected to increase price competition in the SSL VPN marketplace (see Cisco: It Takes Two to Twingo).The Riverhead acquisition is expected to close in the third quarter of Cisco’s 2004 fiscal year.

— James Rogers, Site Editor, Next-gen Data Center Forum