Notable Acquisition Earns Networking Giant a Boost into the Cloud; Cisco Acquires Meraki
On November 18, Cisco announced its intent to acquire Meraki - a startup leading the move to cloud-based networking - for ~$1.2B in cash. Meraki solutions enable centralized, cloud-based management of on-premise networking solutions.
Key drivers of this acquisition:
- Grow Penetration into the SMB Market - While Cisco's wireless infrastructure solutions are clearly market-leading, offering a high level of quality and service, Cisco is known as a top-of-the-line vendor with a high price tag associated with its products/ services. Cisco is betting on the flexibility and scalability offered through Meraki solutions to expand its overall target market with greater support of SMB requirements.
- Rising Competitor, Promising Growth - 2011 saw Meraki achieve approximately $100M in bookings, and nearly tripling its employee base from 120 to 330 employees. Established in 2006, this performance is especially notable, indicating the strong future growth potential for Meraki. While not necessarily competing head-on with Cisco - a vendor strong in serving large enterprise customers - Meraki's technologies are complementary to Cisco's existing portfolio. Further, Meraki's low pricing model definitely represented a real concern for Cisco.
- Cisco Slow to Address Rapid Market Shifts - Smartphones and - increasingly - tablets are putting pressure on organizations' wireless networks. While Aruba has developed solutions such as ClearPass and Aruba Instant to tackle these growing enterprise concerns, Cisco had not yet announced such a product. We will likely see Cisco announce several new products and solutions over the next 12-24 months as Meraki's technologies are integrated into the Cisco infrastructure.
While Meraki has no doubt made a splash - over the past few years - as a very successful startup in the networking space, this acquisition will facilitate more rapid global expansion of these offerings. In all, VDC expects this acquisition to expand Cisco's solutions portfolio, and hopefully facilitate further innovation from this networking giant.