Cisco to acquire SD-WAN startup Viptela for $610m

Cisco has agreed to acquire Viptela in a deal worth $610 million to boost its SD-WAN portfolio and accelerate its transition to a subscription-based business model.

Cisco has announced that it is acquiring Viptela, a software-defined wide area network (SD-WAN) startup based in San Jose, California, in a deal worth $610 million.

Founded by former Cisco engineers Amir Khan and Khalid Raza, Viptela delivers end-to-end network virtualisation that allows for application aware routing, service chaining, centralised policy, and orchestration capabilities.

The company has raised more than $108 million since its founding in 2012.

While Cisco provides both on-premises and cloud-based SD-WAN offerings -- including Cisco Intelligent WAN and Meraki SD-WAN -- its VP of corporate business development, Rob Salvagno, stated in a blog post that the acquisition will allow the company to provide an alternative for enterprises seeking an "easy to deploy" and "simple to manage" solution.

The acquisition will also "[accelerate] Cisco's transition to a recurring, software-based business model", Salvagno wrote.

"Viptela's technology is cloud-first, with a focus on simplicity and ease of deployment while simultaneously providing a rich set of capabilities and scale. These principles are what today's customers demand," Scott Harrell, senior vice president of product management for the Cisco Enterprise Networking Group, said in a statement.

In its February financial results, Cisco reported 51 percent year-on-year growth in its product deferred revenue related to its recurring software and subscriptions, which represents about a quarter of its $11.6 billion quarterly revenue.

The deal is expected to close in the second half of 2017, after which Viptela's team will join Cisco's enterprise routing team within its Networking and Security division.

Cisco and Viptela's engineering teams will continue to "enhance" the former's SD-WAN offering, though no details were provided as to what kind of features or capabilities they are looking to add.

In March this year, Cisco was among a consortium of investors to back Mountain View, California-based SD-WAN startup Velocloud in its $35 million Series D round.

The networking giant, which has more than $70 billion in cash and cash equivalents based on its February financial report, also acquired AppDynamics in January this year in a deal worth $3.7 billion.

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