Cisco Scoops Up Cloud Networking Startup Meraki for $1.2 Billion

by Gaurav Kheterpal on November 19, 2012

It seems that Cisco’s M&A team is working round the clock these days. Barely three days after the networking giant announced its intent to buy datacentre-management software company Cloupia for US$125 million, Cisco yesterday said it will buy privately held cloud networking company Meraki for $1.2 billion in cash as part of its cloud and networking strategy.

Till November, the networking giant had already scooped up LightwireNDSClearAccess, Truviso and invested $100 million in a networking startup called Insieme that was started by three of its ex-employees. While it may take a while for this inorganic growth strategy to yield sizeable returns, it’s good to see Cisco get back to an aggressive mold, reminiscent of its golden era.

As for Meraki, it’s turning out to be a dream startup benchmark for budding entrepreneurs  in the cloud networking segment. The company offers wireless infrastructure products and was founded in 2006 by MIT candidates – Sanjit Biswas, John Bicket and Hans Robertson with the backing of Sequoia Capital and Google. Meraki boasts 18,000 customer networks in 145 countries, with customers including Westfield, Burger King, Accor, Radisson, THQ, and the US Department of Energy.

Last month, Meraki reported that it added 3,000 customers in the third quarter and that revenue grew 150% from a year earlier. Meraki achieved a $100 million bookings run-rate, shipped another major product family, grew from 120 to 330 employees, and became cash-flow positive recently. The company also announced a program to provide free networks to startups. As part of the deal, Meraki will form Cisco’s new Cloud Networking Group, and the acquisition is expected to be completed in the second quarter of Cisco’s fiscal year in 2013.

“After several weeks of consideration, we decided late last week that joining Cisco was the right path for Meraki, and will help us achieve our goal of having maximum impact. As founders, all three of us plan to stay on as leaders of the business unit, and look forward to continue towards our goal of US$1 billion in annual revenue. We continue to be transparent with you all, and while some things, like our email addresses, etc, will change in our day-to-day operations, we will ensure the important things like our culture stay the same,” Meraki CEO Sanjit Biswas said in a letter to Meraki employees.

Cisco says the deal will allow it to offer alternative solutions to traditional Wi-Fi deployment models like smaller competitors, such as Aruba Networks and Ruckus Wireless. The Meraki acquisition is yet another milestone in John Chambers’ aggressive strategy to capitalize on the boom in demand for smartphones and tablets in the workplace by snapping up a company that helps businesses manage security and wireless access points via the Internet.

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Written by: Gaurav Kheterpal. Follow TheTelecomBlog.comby:RSS,TwitterFacebook, or YouTube.



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November 30, 2012 at 5:06 am

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