Viptela‘s Blog contains the following Thank you Viptela Customers, Partners and Employees post. This is CEO Praveen Akkiraju‘s post to announce that Viptela has signed a definitive agreement to sell to Cisco Cisco Systems, Inc. 47,10 +0,39 +0,83%. Cisco will be paying $610m in cash for Viptela, when the deal closes in the later half of 2017. As always with most transactions, this needs regulatory review.
Praveen is no stranger to Cisco, having worked for them for many years in the past. This is another example of Cisco’s successful program to release senior executives, and have them spin-up a startup. Once the startup has grown to a suitable size (typically $500m) Cisco will acquiring it, bring the executive back home. This strategy places the risk outside of the Cisco core business in the start-up phase, and allows them to gain a company that has a proven track record and business model, and just maybe, an ethos that fits the Cisco culture.
Viptela has been successful in becoming the most deployed SD-WAN solution in the Fortune 1000 companies. It has made a great play with service providers in being the basis of a managed SD-WAN solution, with Verizon being a key partner.
I’m not sure how having three separate SD-WAN environments is going to help Cisco. The wording of both the press release and blog seem to indicate what they are really after.
The acquisition of Viptela also supports Cisco’s strategic transition toward software-centric solutions that deliver predictable, recurring revenue. – Cisco Press Release
This phrase provides the clearest indication that it’s primarily for the software IP that they are acquiring Viptela.
The more cynical part of me says software integration is difficult. It wouldn’t surprise me if Cisco kills off the direct Viptela products very quickly. Cisco will try to develop the cloud management platform to deliver on its preferred subscription model. Will IWAN survive the merger, and enhanced to take advantage of the cloud management platform? And does Meraki gain from some of that intelligence?
With Viptela, Cisco can offer customers more choice in their enterprise branch offices and WAN deployments, with a compelling SD-WAN solution that is easy to deploy and simple to manage. – Cisco blog: Empowering Customers at the Edge.
Here is Cisco’s tacit agreement that IWAN is not as easy to deploy and manage as other SD-WAN solutions.
Let’s see what happens, as I expect more consolidation in this market space over the next year, even after Riverbed’s recent acquisition of Xirrus.
