Cisco acquires Meraki: how 3 guys from MIT transformed the networking industry
Quick: when was the last time you plugged in an Ethernet cable? If you have trouble answering that question, you're one of the reasons why Cisco has agreed to acquire Meraki.
Context & Ripple Effects
Cisco had already pursued network capabilities through its 2008 agreement for Pure Networks and its 2010 move to acquire network-management software company LineSider. The Meraki agreement extends that acquisition pattern into enterprise Wi-Fi.
The deal is framed around a shift away from plugging in Ethernet cables, making managed wireless connectivity a strategic adjacency for Cisco rather than merely another networking product category.
First-order effects
- Cisco has agreed to pay $1.2 billion in cash for Meraki, bringing the enterprise Wi-Fi startup into Cisco’s planned portfolio.
- Meraki’s standalone path changes from building an independent enterprise Wi-Fi business to becoming part of Cisco, subject to the transaction closing.
Second-order effects
- Enterprise buyers evaluating Cisco’s networking offerings will have an additional wireless option to weigh alongside the company’s earlier network-management investments.
- The combination sharpens Cisco’s incentive to connect wireless access and network-management capabilities, increasing pressure on specialists that sell either function alone.
Third-order effects
- If Cisco continues to use acquisitions to add adjacent networking capabilities, competition in enterprise networking will shift further from discrete equipment categories toward broader, managed connectivity portfolios.
- The deal points to a market in which startups with focused network-management or wireless products can become strategic acquisition targets for incumbent infrastructure vendors.
The trend: Enterprise networking is moving toward acquisition-led portfolios that combine connectivity hardware with software-led management and wireless access.