What Is Cisco?

Cisco Systems (CSCO) is one of the world's leading information technology and networking companies. As of June 2020, Cisco had a market cap of $194.94 billion and was the largest company in the networking and communications devices industry. Cisco has a pattern of acquiring companies to make gains in market acceleration, market expansion, and new market entry.

Key Takeaways:

  • Cisco Systems is one of the world's leading information technology and networking companies.
  • With a market cap of close to $195 billion, Cisco uses acquisition to dominate the networking and communications devices industry.
  • Recent acquisitions have focused on gaining capabilities in the following areas: 5G wireless, data center/hyperconverged infrastructure, artificial intelligence, and security.

Understanding Cisco's Acquisitions

Cisco was founded in 1984. Since then, it has acquired over 200 firms, approximately six per year, according to SiliconANGLE Media Inc. Since 2017, Cisco's acquisition strategy has reflected its focus on four areas: 5G wireless, data center/hyperconverged infrastructure, artificial intelligence, and security.

Cisco's recent activities reflect its pursuit of a prominent role in 5G and maintaining its leading position as an infrastructure platform business. Thus, recent acquisitions are, according to SiliconANGLE, "cloud-first, application-centric, and software-defined."

This approach was clear when Cisco acquired AppDynamics Inc. and Viptela Inc. for a combined $4.3 billion in 2017. AppDynamics gave Cisco an enterprise tool for managing application performance and software while Viptela's solution manages interconnected dispersed networks.

Also, according to SiliconANGLE, the acquisition of Springpath Inc., Skyport Systems, Inc.,and the Australia-based network performance vendor Exablaze Pty. Ltd. over the past two years moved Cisco further into the hyperconverged infrastructure space.

Artificial Intelligence

Cisco is focusing on artificial intelligence (AI) and acquired MindMeld Inc. in 2017, which was then redeployed as an open-source AI platform. Cisco bought Accompany Inc., in 2018, which is an AI-driven relationship intelligence platform, and the company bought Voicea Inc. as a voice transcription solution for its Webex meeting tool. Other AI-focused acquisitions include Perspica Inc., with its machine-learning capability to evaluate large amounts of application data, and Cmpute.io, which analyzes cloud-deployed workloads and consumption patterns.

Here are five other notable acquisitions by Cisco.

Acacia Communications, Inc.

In July 2019, preparing for 5G and the surge in data, Cisco acquired Acacia Communicaions Inc., by Cisco for $2.6 billion. The acquisition gave the company optical component technology. This acquisition complemented the purchases of Ensoft Ltd., a software solutions company, and Singularity Networks, Inc., which provides technology for data processing.

Duo Security Inc.

In 2018, Cisco purchased Duo Security, Inc., for $2.35 billion. Duo, an early player in zero-trust strategy, functions on the assumption that all users and devices are untrusted until proven otherwise. Cisco considers the acquisition a complement to its multicloud services.

“This acquisition is going to enable us to allow customers to securely connect any user on any device to any application over any network,” said Cisco executive David Goeckeler at the time of the announcement. “It’s just that simple.”

Jasper Technologies

On March 22, 2016, Cisco acquired Jasper Technologies for $1.4 billion in cash. Jasper provided Cisco with a cloud-based IoT platform that allows companies to launch, manage, and monetize IoT services. Jasper is the leading platform in the IoT industry and enables many of the world's largest companies to connect any device over cellular networks and manage the IoT services connectivity through its software as a service (SaaS) platform.

Meraki

Cisco purchased Meraki in 2012 for a whopping $1.2 billion. Meraki is a leader in cloud networking and helped to expand Cisco's technology to manage Wi-Fi networks. Meraki offers mid-market customers with networking solutions that they can manage remotely from the cloud. Cisco's acquisition led to the formation of its Cloud Networking Group, and Meraki provided scalable network solutions to users.

NDS Group

In 2012, Cisco acquired British software company NDS Group for approximately $5 billion. The acquisition advanced Cisco's Videoscape strategy, which aimed to create entertainment experiences through social media, video, and television.

NDS Group, now known as Cisco Videoscape, is a provider of video software and content security solutions that let companies securely deliver and monetize entertainment experiences.

Cisco has continued to be one of the world’s largest and most successful networking companies. The company's growth of its product and services portfolio is primarily based on strong outside acquisitions to help Cisco achieve a prominent position in the cloud and software market.