Cisco Aims for Small Businesses with Meraki Acquisition

Meraki offers midmarket customers a variety of on-premise networking solutions, expanding Cisco’s network offerings to small businesses.

Networking giant Cisco is looking to expand its reach into the small to medium-size business market with the acquisition of Meraki, which offers WiFi, switching, security and mobile device management that is centrally managed from the cloud.

Under the terms of the agreement, Cisco will pay approximately $1.2 billion in cash and retention-based incentives to acquire the entire business and operations of Meraki.

Headquartered in San Francisco, with offices in New York, London and Mexico, Meraki offers midmarket customers a variety of on-premise networking solutions, which will expand Cisco’s network offerings by providing scalable solutions for small businesses.

Cisco said the Meraki acquisition would also strengthen Cisco’s Unified Access platform, which is designed to simplify IT operations and unite wired and wireless networks, policy and management into one integrated network infrastructure.

“The acquisition of Meraki enables Cisco to make simple, secure, cloud managed networks available to our global customer base of mid-sized businesses and enterprises. These companies have the same IT needs as larger organizations, but without the resources to integrate complex IT solutions,” Cisco Enterprise Networking Group senior vice president Rob Soderbery said.

“Meraki’s solution was built from the ground up optimized for cloud, with tremendous scale, and is already in use by thousands of customers to manage hundreds of thousands of devices.”

Founded by members of MIT’s Laboratory for Computer Science, Meraki combines a high-velocity software development methodology with a sales and channel model that will form the new Cloud Networking Group at Cisco. Meraki’s solutions support bring your own device (BYOD) platforms, guest networking, application control, wide area network (WAN) optimization, application firewall and other networking services.

"When compared to other opportunities, Meraki built a unique cloud-based business from the ground up that addresses the broader networking shift towards cloud, not just within wireless. Meraki created a massively scalable architecture that offers easy to deploy, secure, and manage networks," Cisco's vice president of corporate business development Hilton Romanski wrote in a company blog post. "They didn’t obsess about the number of features, but instead focused on those that could be simplified or removed entirely. Customers liked what they saw, and today they are supporting 20,000 customers and hundreds of thousands of network devices on their cloud platform."

The Meraki acquisition is Cisco’s second in less than a week: On Nov. 15, the company announced it had picked up Cloupia, a Santa Clara, Calif.-based software company that automates converged data center infrastructure, which helps enterprises and service providers to simplify the deployment and configuration of physical and virtual resources from a single management console.

When combined with data center management solutions like Cisco’s Unified Computing System (UCS) Manager, Cloupia allows enterprises and service providers to manage pools of computing power, network services, storage and virtual machines as a unified whole in order to deploy and deliver IT services with greater speed and at a lower cost.

Cisco paid approximately $125 million in cash and retention-based incentives in exchange for all shares of Cloupia.

The acquisition is expected to close in the second quarter of Cisco’s fiscal year 2013, subject to customary closing conditions, including regulatory review, Cisco said.