Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.
These acquisitions helped Cisco jump on market trends early on, and take hold of them as they grow into money-makers.
Who said this quote: "If this market transition truly evolves the way that I think it's most likely to, the worst decision you could make is to not move." The answer is easy, as there's no person in technology that talks more about market transitions than Cisco's charismatic CEO, John Chambers.
Catching market transitions at the right time has enabled Cisco to move into many adjacent markets, helping shape the company into the giant it is today. Cisco has often used acquisitions as a way of moving into these new markets rapidly. Here are the top 10 acquisitions by Cisco that led to its largest adjacent opportunities.
Crescendo Communications, September 1993
Prior to September 1993, Cisco's network portfolio consisted primarily of routers. Then Cisco acquired Crescendo for about $90 million, and the Catalyst line was borne with the introduction of the 5000. Switching is now Cisco's largest revenue stream and the Catalyst modular switches have accounted for billions of dollars since the acquisition, making Crescendo's $90 million price tag seem like John Chambers' pocket change. In addition to the products, Cisco acquired a number of notable individuals who played a key role in the growth of Cisco, including Luca Cafiero, Buck Gee, Prem Jain, Mario Mazzola, Randy Pond, and Jayshree Ullal.
Kalpana Inc, October 1994
About a year after acquiring Crescendo, Cisco dropped another $200 million on Kalpana, which many at the time considered the leader in Ethernet switching. Kalpana was the first vendor to introduce a multi-port network switch with the release of its EtherSwitch, which featured a whopping seven ports, in 1989. The product line acquired from Kalpana led to the Catalyst 3000 stackable portfolio. Kalpana was also responsible for EtherChannel, a proprietary method of aggregating multiple ports together. This was the one of the first of many proprietary standards that Cisco used to make the end-to-end Cisco network easier to manage than its competitors' products. Kalpana was also the company that brought the brilliant Charlie Giancarlo into the Cisco fold.
Network Translation, October 1995
Prior to 1995, Cisco was a networking company but had no presence in the security market. Then Cisco opened its wallet and acquired Network Translation Inc. (NTI). That led to the addition of a web cache, a local director, and the product that transformed Cisco into a security leader – the PIX Firewall. While the firewall market is highly crowded today, there was a time when CheckPoint and Cisco dominated the market in both mindshare and market share. Cisco now has one of the broadest security offerings with too many products to list here, but it all started with the acquisition of NTI.
Selsius, October 1998
Of all the acquisitions Cisco has made, none may have had a bigger impact to Cisco than Selsius. For a mere $145 million, Cisco acquired the company that enabled it to move into the voice-over-IP market. At the time, legacy phone system vendors insisted that no one would buy IP-based phone systems because the technology was not reliable enough. But the technology got better and Cisco was able to shift the decision making to its customers. About 15 years and billions of dollars later, Cisco stands as the market leader in VoIP sales and its Call Manager remains the most widely deployed IP PBX to date. Cisco has since acquired a number of other VoIP companies, but it all started with Selsuis.
Aironet Wireless, November 1999
With the company's market cap near an all-time high and rumblings of Cisco becoming the first trillion-dollar market cap company, the company ponied up a paltry $799 million to acquire Aironet Wireless for its first enterprise wireless LAN solution. The $800 million amounted to mere pocket change, but proved to be a great acquisition. At the time, wireless certainly wasn't the norm, but the shift to wireless had clearly begun.
Cisco also acquired Airspace in 2005, giving the company a controller-based solution, and, of course, complemented these solutions with the Meraki acquisition last year.
Altiga Networks, January 2000
On January 19, 2000, Cisco made two acquisitions in the VPN space, for a combined $567 million. The first was Compatible Systems Corp, giving Cisco a strong service provider VPN solution. The one I really liked was the purchase of Massachusetts-based Altiga.
At the time, the concept of building VPN-based networks and granting remote workers VPN access was becoming more common. Prior to VPN access, remote work involved dialing into PCs and using software to control the desktop remotely. Altiga gave Cisco one of the leading VPN providers on the market (although I still contend Nortel's Contivity was better) and caught the VPN wave early.
Andiamo Systems, August 2002
Cisco's acquisition of Andiamo was notable for two reasons. The SAN space was a two-horse race, with Brocade and the poorly named McData out ahead. The MDS product that came from Andiamo gave customers a third credible option. The move was Cisco's first into the world of computing. It was also Cisco's first "spin in," where the company funded a startup, let it build a product, and then brought it back into the fold.
Andiamo's success paved the way for Cisco to later spin in Nuova (which became UCS), and most recently Insieme. The $750 million that the company spent on Andiamo certainly seems like a bargain considering it put Cisco on the computing map and legitimized its spin-in strategy.
Linksys Group, March 2003
Many may disagree with this, but despite Cisco recently divesting itself of Linksys, the acquisition was a good one at the time. Cisco paid $500 million for the consumer-centric company and then went on to dominate the home networking market for years. The Linksys products were also highly attractive to small businesses that didn't need the features or high price points of Cisco's traditional products. Cisco certainly dominated consumer "connectivity," but never managed to build on top of that success, as the Pure Digital (Flip camera) acquisition flopped. I believe Cisco squeezed all it could out of Linksys as the shift to cloud and other trends has made owning the home connectivity market much less important.
WebEx Communications, March 2007
Prior to the $3.2 billion acquisition of WebEx, Cisco's entire Unified Communications portfolio was CPE-based, including the content-sharing application the company acquired from Latitude. At the time of the acquisition, WebEx was the market leader in web conferencing and, despite a number of emerging competitors and other acquisitions, WebEx remains the de facto standard today. Cisco has added a number of new features, including an event center, training center, and real-time video capabilities.
Tandberg, October 2009
In late 2006, Cisco launched its line of TelePresence products. While other immersive products were on the market, no vendor had really evangelized its value quite like Cisco. So, in typical Cisco fashion, the company complemented its portfolio with the $3 billion purchase of Tandberg, one of two dominant vendors in the video conferencing market. The benefit that Tandberg offered over San Jose-based neighbor Polycom was that it was located in Europe, allowing Cisco to use foreign money to pay for it, rather than repatriating cash to buy a U.S. vendor. Tandberg brought Cisco a broad line of video collaboration products, as well as a number of smart people, such as OJ Winge (now at Acano) and Snorre Ksjesbu.
Insieme and WHIPTAIL, late 2013
I'll add a bonus slide to the mix. It's a bit too early to tell how successful Insieme and WHIPTAIL will be, but both are notable as they build on the success that Cisco has had with its Unified Computing System (UCS) product from the Nuova acquisition. WHIPTAIL moves Cisco into the emerging flash storage industry, and Insieme has become the heart of Cisco's software defined networking (SDN) strategy.
Reseller News Innovation Awards
Women in ICT NZ
Reseller News After Hours