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Viptela the latest Cisco acquisition in $610M deal

SD-WAN vendor Viptela is the latest Cisco acquisition, as the networking vendor takes steps to fortify its cloud services portfolio.

With its planned acquisition of Viptela Inc., Cisco has taken a necessary step forward to fortify its existing SD-WAN portfolio, as it continues to migrate more of its services to the cloud.

Cisco this week said it would purchase Viptela for $610 million in a transaction expected to close later this year.

"I think it will bring a lot more satisfied SD-WAN customers to Cisco," said John Burke, an analyst with Nemertes Research in Mokena, Ill. "It's no secret that implementing IWAN has never been as simple or as easy as anybody wanted it to be, and Viptela seems to provide a much easier path to value -- really getting the benefit of simplified and holistic management into practice and into service."

Cloud-based controller anchors Cisco acquisition

Five-year-old Viptela, based in San Jose, Calif., bases its technology on a framework it calls the Secure Extensible Network. The platform uses physical vEdge routers to form a secure data plane, as well as a cloud-based controller that orchestrates connectivity among the routers and dynamically provisions bandwidth as needed.

The acquisition makes perfect sense in the context of where Cisco is today.
Lee Doyleprincipal analyst, Doyle Research

Viptela counts Gap Inc. and an unidentified 3,000-branch bank as major customers of its technology. Its framework is also used to underpin managed SD-WAN services offered by a number of providers, including Verizon and Singtel.

The Cisco acquisition will enable the networking vendor "to deliver a comprehensive portfolio of on-premises, hybrid and cloud-based SD-WAN solutions," according to Scott Harrell, Cisco's senior vice president of product management for its enterprise networking group. The company will offer Viptela's cloud-based service in addition to its existing IWAN and Meraki SD-WAN products.

Cisco has already demonstrated that Viptela's framework will run on the Integrated Services Routers that anchor IWAN; the two vendors' technologies are also used as part of Verizon's SD-WAN service. Whether Cisco might want to supplant the ISR devices with Viptela's vEdge routers in future customer deployments might be one of the vendor's first priorities.

This isn't the first time Cisco has investigated how it might harness the cloud for IWAN. In January 2016, Cisco was among a number of companies that helped raise $27 million in Series C financing for VeloCloud, which has its own cloud-based architecture for connecting branch offices.

Cisco acquisition makes 'perfect sense'

"Instead of retooling its legacy technologies, it's easier for [Cisco] to buy someone," said Lee Doyle, principal analyst at Doyle Research, about the deal. "Viptela has a good approach, and it will provide another router platform for Cisco. The acquisition makes perfect sense in the context of where Cisco is today."Cisco has been on a buying spree of late, purchasing AppDynamics for $3.7 billion earlier this year and acquiring internet-of-things vendor Jasper Technologies for $1.4 billion in 2016.

The latest Cisco acquisition is part of a move by the vendor to broaden its package of cloud services, as it targets a customer base that wants to use software instead of proprietary hardware to manage their networks.

Extending its penetration into an SD-WAN market that is expected to eclipse the $6 billion mark in 2020, according to IDC, is a logical ingredient of that strategy.

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