CISCO Acquires Pakistani Led Startup for $610 Million

CISCO has been very active in the past couple of years, buying out 19 companies during this time period and bolstering its portfolio and leading position in the tech space.

Today, it has announced its acquisition of Viptela, a cloud based SD-WAN vendor, for $610 million. The company was founded in 2012 by a group which included a Pakistani-American duo – Amir Khan and Khalid Raza.

One of the founding members, Khalid Raza, had studied at Karachi’s NED University of Engineering and Technology.

Since its inception, the company has raised $108 million including a recent $75 million round of funding in 2016.

The venture-backed startup is based in San Jose, California. It is known for its SD-WAN (Software Defined Wide Area Network) solution. Viptela’s SD-WAN can be used by companies to connect networks in geographically distant offices.

This Pakistani-American startup simplifies the deployment and management of complex networking tasks.

Scott Harrell, Senior Vice President of Product Management for CISCO Enterprise Networking Group, said in a statement that

“Viptela’s technology is cloud-first, with a focus on simplicity and ease of deployment while simultaneously providing a rich set of capabilities and scale. These principles are what today’s customers demand.”

Cisco’s Plans

For a company like CISCO, which has been buying cloud companies regularly, acquiring Viptela makes sense and is more in line with the networking giant’s market focus. Earlier this year, CISCO purchased AppDynamics for $3.7 billion. The year before, it bought Jasper Technologies, an IoT platform, for $1.4 billion. CISCO has over $70 billion as spare cash, so buying these companies is nothing more than pocket change for the conglomerate.

The new buyout also tends to point out CISCO’s intentions of backing up its hardware based network business with a service-oriented business. The services and solutions based revenue model gives the company the ability to extend its current subscription model.

CISCO already offers a cloud SD-WAN solution, but according to its VP of corporate business development, Rob Salvagno, the purchase enables it to offer a more modern solution compared to what they are currently offering.

Salvagno added “Together, Cisco and Viptela will be able to deliver next generation SD-WAN solutions to best serve all size and scale of customer needs, while accelerating Cisco’s transition to a recurring, software-based business model.”

The deal is expected to close by the second half of this year. When it’s done, the Viptela team will join CISCO’s Enterprise Routing Team within the Networking and Security Business.