Ecosystm Snapshot: Cisco betting big on mergers and acquisitions
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Cisco is on a mission of market acceleration, market expansion, and new market entry points.

On 9th July 2019, Cisco announced it’s intention to acquire Acacia Communications in a deal worth USD2.6 billion. Acacia communications make optical interconnect technology and is an existing supplier to Cisco. This was Cisco’s biggest acquisition since its USD3.7 billion purchase of AppDynamics in 2017. Acquiring Acacia will enable its customers to drive more data over high-speed optical interconnect and the company is also looking to take advantage of the company’s optics, digital signal processing, transceivers and other gear used in networking equipment. The deal is expected to close in the second half of Cisco’s current fiscal year following which Acacia will become Cisco’s Optical Systems business.

In June 2019, Cisco announced that they will acquire Sentryo – a French industrial IoT company. The acquisition of Sentryo’s platform will combine their capabilities with Cisco’s offerings in order to better manage the challenges that customers face while deploying IoT projects, scaling production, and managing and securing infrastructure.

Similarly, in February 2019, Cisco acquired Singularity Networks – an analytics platform. Cisco has integrated Singularity Networks platform into its Cross Network Automation portfolio, a solution that embraces multi-vendor networks.

In 2018, Cisco completed the acquisition of a cybersecurity firm, Duo Security for USD2.35 billion and also announced that it will acquire Luxtera, a semiconductor company, for USD660 million which was fully acquired in Feb 2019.


Cisco’s underlying strategy

As technology evolves so quickly, new ideas can come from anywhere and its companies are always on the lookout for business models which may shape their future markets and direction.

While we saw an acquisition and merger strategy by media companies to acquire content companies, the same holds true for Cisco but from the perspective of network traffic data management. Cisco’s response to this is to buy companies that will ensure that Cisco’s network performance can scale for the predicted massive amount of IoT-based data from smart cities, 5G, Industry 4.0 and of course A.I,” says Ecosystm Executive Analyst, Vernon Turner. “Having stronger network and application performance analytics also feeds into its broader Intent-Based Networking strategy which recently has been extended to include Edge network devices as well as the Enterprise based devices.”

Cisco has established a highly structured innovation strategy consisting of 5 pillars – build, buy, partner, invest and co-develop – to drive its innovation engine.

Turner commented “Cisco has always based its network strategy on architectures and frameworks. This compliments CIO’s strategies on how to build a multi-cloud based infrastructure and they will look to Cisco for a single solution provider. Application and device management are the topics that companies generally don’t like to farm out to multiple vendors.”.


Market Gaps

Despite all the growth and acquisitions, there are still areas that Cisco can look at, in order to further strengthen their position.

The market is looking for full end-to-end solutions to manage devices, their network and application data traffic, security across multi-cloud service providers and communication services providers. Cisco has to look to companies such as VMware, and RedHat to take the discussion to levels such as container and bare metal server management. In addition, there are emerging needs within software-defined networks that will require Cisco to consider further acquisitions,” explains Turner.


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