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Cisco Chomps FineGround

Cisco Systems Inc. (Nasdaq: CSCO) will fork out $70 million in cash and options to buy FineGround Networks, a wide-area file services (WAFS) and application optimization vendor based in Campbell, Calif. (see Cisco to Buy FineGround).

FineGround was founded in 2000 and is privately held, with about $21 million in funding, primarily from New Enterprise Associates (NEA) and WorldView Technology Partners. Its recently released flagship product is the Velocity-FS, an appliance that sits in the data center and accelerates Web-based application performance over IP networks, without any remote agents required (see FineGround Wades Into WAFS). It claims 12 patents on technology it says improves application response time two to five times for remote sites.

FineGround says it has more than 100 enterprise deployments and claims Alcoa, BMW, Cargill, Royal Mail, Sun Microsystems, Walgreens, and Whirlpool as customers.

The deal is another jawbreaker in a feeding frenzy that has WAFS and WAN optimization suppliers jostling for selection by large IT infrastructure players (see Remote Site Rapprochement). It's been less than a month since Juniper Networks Inc. (Nasdaq: JNPR) declared it would buy Peribit Networks Inc. for $337 million (see Peribit Deal: More to Come). And it's just days since SAN switch vendor Brocade Communications Systems Inc. (Nasdaq: BRCD) declared its investment in Tacit Networks Inc., and Hewlett-Packard Co. (NYSE: HPQ) announced a resale arrangement with Riverbed Technology Inc. (see HP in Deal With Riverbed, Sources Say).

Cisco's move is both expected and surprising. Though Cisco publicly states that it's happy with the WAFS technology it acquired with the purchase of Actona for $82 million in cash last year, there have been persistent rumors that Cisco's not content (see Cisco Acts on Actona). But sources thought the vendor would move to add a vendor with more of a transport optimization background (see Cisco Prowling WAN Optimization?). Instead, Cisco opted for another vendor with an upper-layer WAFS-oriented solution.

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