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Cisco spends $1.2bn for cloud computing outfit Meraki

Mon Nov 19 2012, 11:07
A Cisco logo on a building

Biswas gave some insights into the rationale behind accepting the deal in an email to staff that the firm made public.

"When Cisco approached with an acquisition offer a few weeks ago, our initial reaction was to politely say ‘thanks, but we're planning to do our own thing and take Meraki public'," he said.

"It turned out that was exactly why they were interested in talking to us - over the past six years, we'd developed an innovative product as well as sales model that was indeed our own thing and unique in the market.

"They had been hearing from customers, partners and analysts that Meraki had built something truly different, and wanted to see if Cisco could distribute the technology on a worldwide scale through their vast sales channels."

The deal will see Cisco pay $1.2bn in cash, with the acquisition expected to close in the second quarter of fiscal year 2013.

Quocirca analyst Clive Longbottom told The INQUIRER that Cisco appeared to be paying a premium for Meraki, although it undoubtedly had long-term plans for the firm.

"Meraki's network products have a heavy overlap with Cisco's, and the wireless stuff is really what Cisco wants," he said.

"Cisco needs to be able to be more of a total systems play and as such needs networking that not only takes it outside of the datacentre, but also outside of the wired environment, and also more into the mid-market and SMB.

"It has had these in the past - Linksys as an SMB play, Airespace for WLAN - but doesn't seem to be able to manage them well enough to make the most of them.

"The overlap between Meraki and other acquisitions is big - Meraki does bring some software to the game, but I still think that the deal is a tad expensive for Cisco - unless it really gets its finger out and does something solid with it this time around." µ


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