Cisco, one of the most acquisitive
technology companies in Silicon Valley, agreed on Tuesday to pay $415
million in cash for Whiptail, which makes software to manage flash
storage in the cloud.
For Cisco, best known as a networking company, the deal for Whiptail is among its first moves into the storage space. But the deal may also increase the tensions between Cisco and an important partner, EMC, the large storage company based in Massachusetts.
Last year, VMware, which is majority owned by EMC, paid $1.26 billion for Nicira, a next-generation networking company. That deal pitted EMC and Cisco against each other by not only reducing EMC’s need for Cisco’s products, but also putting the two companies in direct competition for selling networking gear to their customers.
EMC‘s
chief executive, Joe Tucci, speaking at the Techonomy Conference in
Tucson, Ariz., last November, acknowledged that VMware’s deal for Nicira
had created some tensions.
“Cisco is our closest and most strategic partner, and we’ll have a long, prosperous relationship,” Mr. Tucci said. But buying Nicira put “a little stress on the relationship,” he said.
By purchasing Whiptail, Cisco has effectively hit back. Whiptail makes software that allows corporate clients to easily manage large arrays of flash storage in the cloud, an area in which EMC has traditionally excelled. What’s more, EMC bought an important Whiptail competitor, XtremIO, last year.
As large enterprise technology companies rush to provide ever more services to their clients, tensions between longtime partners are likely to become more common.
“We are focused on providing a converged infrastructure including compute, network and high-performance solid state that will help address our customers’ requirements for next-generation computing environments,” Paul Perez, general manager of Cisco’s computing systems product group, said in a statement.
But Hilton Romanski, head of mergers and acquisitions for Cisco, said the deal did not mark any greater ambition to take on EMC. “We have no intention to enter into the broader storage market,” he said in an interview. “It’s a space where the incumbents are doing perfectly good job.”
The Whiptail acquisition is Cisco’s 12th deal of the year and brings its annual total spent on acquisitions to more than $4 billion, according to Dealogic. Over the last five years, Cisco has spent more than $18 billion on upwards of 70 deals.
Evercore advised Whiptail on the deal.
For Cisco, best known as a networking company, the deal for Whiptail is among its first moves into the storage space. But the deal may also increase the tensions between Cisco and an important partner, EMC, the large storage company based in Massachusetts.
Last year, VMware, which is majority owned by EMC, paid $1.26 billion for Nicira, a next-generation networking company. That deal pitted EMC and Cisco against each other by not only reducing EMC’s need for Cisco’s products, but also putting the two companies in direct competition for selling networking gear to their customers.
“Cisco is our closest and most strategic partner, and we’ll have a long, prosperous relationship,” Mr. Tucci said. But buying Nicira put “a little stress on the relationship,” he said.
By purchasing Whiptail, Cisco has effectively hit back. Whiptail makes software that allows corporate clients to easily manage large arrays of flash storage in the cloud, an area in which EMC has traditionally excelled. What’s more, EMC bought an important Whiptail competitor, XtremIO, last year.
As large enterprise technology companies rush to provide ever more services to their clients, tensions between longtime partners are likely to become more common.
“We are focused on providing a converged infrastructure including compute, network and high-performance solid state that will help address our customers’ requirements for next-generation computing environments,” Paul Perez, general manager of Cisco’s computing systems product group, said in a statement.
But Hilton Romanski, head of mergers and acquisitions for Cisco, said the deal did not mark any greater ambition to take on EMC. “We have no intention to enter into the broader storage market,” he said in an interview. “It’s a space where the incumbents are doing perfectly good job.”
The Whiptail acquisition is Cisco’s 12th deal of the year and brings its annual total spent on acquisitions to more than $4 billion, according to Dealogic. Over the last five years, Cisco has spent more than $18 billion on upwards of 70 deals.
Evercore advised Whiptail on the deal.
