Cisco splashes out in big cloud computing push

Cisco is to buy cloud computing company Meraki in a deal worth $1.2 billion.

Meraki, founded in 2006 by a group of MIT students and based in San Francisco, offers cloud-based networking solutions that are targeted at medium-sized businesses. It has around 20,000 customers.

Meraki’s technology includes Wifi, switching, security and mobile device management centrally managed from the cloud, and it supports BYOD, guest networking, application control, WAN optimization and application firewall.

Cisco plans to use the acquisition to strengthen its network offerings by adding scalable solutions for midmarket businesses.

“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,” says Rob Soderbery, senior vice president of Cisco’s Enterprise Networking Group.

“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.”

It’s the second cloud-based acquisition in a week for Cisco, which last week announced it was taking over Cloupia in a deal worth $130 million.

Meraki CEO Sanjit Biswas says his initial reaction to the offer was to decline it and take the company public instead.

“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,” he explained to employees in an email. “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 $1B in annual revenue.”

The deal’s expected to close in the second quarter of Cisco’s fiscal year 2013.