Cisco's $415 million Whiptail experiment ended last week with Cisco's announcement that it was immediately discontinuing its Invicta and Accela products. When Cisco bought Whiptail in September 2013, it was buying a company that had the software secret sauce to turn Supermicro servers full of SSDs into all-flash arrays. With Silicon Valley AFA startups reaching billion dollar valuations, a price of $415 million for Whiptail didn’t seem out of line.
After all, Whiptail had been having some success selling its XLR8R flash array into the go fast, no services tier 0 market on Wall Street. XLR8R grew up to be Invicta, a basic AFA and Whiptail soon started shipping the Accela storage router, bringing data deduplication and other advanced data services to scale-out clusters of Accelas and Invictas. On paper, those could be competitive with Pure Storage and XtremIO and with Cisco’s army of well-connected sales reps, the networking giant could have had a chance in the AFA market.
So why did Invicta fizzle? For many reasons. While there's a proverb that says, “Success has many fathers, failure is an orphan,” it’s more common for true failures to be the result of multiple mistakes and/or misfortunes. In the case of Invicta, it starts with Cisco putting the storage product into the Unified Computing System (UCS)server group and calling it a flash acceleration solution for UCS servers, denying it was actually a storage system.
It would have been bad enough if Cisco had decided to use that half-hearted marketing message, but it really didn’t think of Invicta as storage. The company failed to recognize that storage, because it is persistent, has different frequently more stringent, requirements. Cisco rushed the port of the Whiptail software to run on UCS servers, and the general process of bringing the quality, fit and finish of the product up to market leader standards, pushing Invicta out into the market in January 2014 before it was ready. This rush job resulted in Cisco putting Invicta on hold in September of 2014 to resolve quality problems.
There was also misfortune: Whiptail founder and resident genius James Candelaria had a heart attack in October and had to step aside as the group’s visionary. Add in the usual big company political problems and backstabbing, the bicoastal culture clash of a storage team in New Jersey far from the corridors of power in Silicon Valley, and you start to wonder how anyone pulls off a successful acquisition more than why this one failed.
Cisco shutting down what it never admitted was a storage division can also be seen as related to some more general housekeeping Cisco is doing as John Chambers retires from the CEO role and hands the reins to Chuck Robbins. After all, the Invicta EOL comes at the same time as the sale of Cisco’s cable TV set-top box business to France’s Technicolor for €550 million ($601 million). Set-top boxes made up the bulk of Scientific Atlanta’s business when Cisco acquired it for $6.9 billion in 2006.
My fellow analysts and I have frequently admired how some companies like Cisco and EMC can relatively quickly turn acquisitions like Data General’s Clariion and Kalpana’s Etherswitch into core products. Cisco putting Whiptail and Scientific Atlanta in the loss column demonstrates that no one has a 1.000 batting average in the acquisition business.