The networking industry continued to morph with several significant acquisitions so far this year.
With all the changes in the networking industry as trends like SDN and cloud gain steam, the vendor landscape is shifting fast. What used to be an industry dominated by a handful of established vendors has become one in which startups supplying innovative approaches to networking pop up with regularity.
But as with the entire IT market, mergers and acquisitions are common in networking, as the giants snatch up innovative startups to build up their product lines. There have been several significant deals, including chipmaker Broadcom's $5.9 billion agreement to aquire Brocade.
The always-acquisitive Cisco continued to fill up its shopping cart in its ongoing quest to expand beyond its traditional hardware equipment business and evolve into a software and services company. Most notably, it snatched up IoT startup Jasper for a cool $1.4 billion. Other significant acquisitions that boost Cisco's software strategy include CliQr and ContainerX.
Rival Juniper Networks made a couple of its own moves, one to deepen its SDN capabilities and another to acquire silicon phonetics technology.
Gartner expects continued consolidation in networking, primarily due to a shakout in the SDN space. "There were a number of networking vendors that came to market in the 2011-2015 timeframe, during the SDN hysteria. Several of these vendors have been successful and are growing nicely, both in terms of revenue and customer acquisition," Andrew Lerner, a research VP at Gartner, told me in an email. "There are other vendors that are not having as much success, and their investors tend to get nervous and look to pivot or an exit."
Not all the recent M&A action in the networking market has involved SDN technology. The wireless networking space continued on its rapid consolidation trend with two acquisitions this year. Today there aren't many standalone WLAN vendors left as established networking vendors snap up wireless technologies to fill in their product portfolios, a trend that reflects the growing role of wireless networking in the enterprise.
As this year comes to a close, there are lots of rumors of more M&A deals in networking, including Avaya and F5 Networks. But read on to review the M&A activity in the networking industry so far in 2016.
A10 Networks buys Appcito
A10 Networks, a supplier of application-delivery controller technology, made a big move into the cloud with its acquisition this summer of Appcito, a SaaS-based ADC startup. Appcito was named a Gartner cool vendor in 2015. A10 executives told me this summer that the acquisition was a strategic deal designed to expand its services to cloud-native applications. A10 did not disclose financial details of the deal.
VMware acquires Arkin
In June, VMware acquired startup Arkin Net, one of its strategic technology partners. Founded in 2013, Arkin was focused on providing management capabilities for virtual networks. VMware executives described its platform as "purpose-built for NSX, VMware's network virtualization platform. Gartner named Arkin one of its cool vendors in enterprise networking earlier this year.
In a blog post, Shekar Ayyar, corporate senior VP of strategy and corporate development at VMware, described the company's M&A strategy. "Starting from our beachhead in server virtualization, we have expanded our capabilities in the software-defined data center and cloud by spanning compute, networking, storage, and management," he wrote. The acquisition of Arkin will help "create a bridge and accelerate two of our key growth businesses: management and networking."
Broadcom inks deal for Brocade
Singapore-based Broadcom announced Nov. 2 that it has agreed to buy San Jose-based Brocade for $5.9 billion. The chipmaker plans to retain Brocade's Fibre Channel SAN switching business, but sell its IP networking business, including Ruckus Wireless, which Brocade acquired earlier this year. Broadcom, which makes Ethernet switch chips, said the deal will boost its portfolio of enterprise storage and networking products.
When Brocade bought Ruckus for approximately $1.2 billion, the company said the deal would help it target the emerging IoT and 5G markets. At the same time, the acquisition marked yet another M&A deal in a rapidly consolidating WLAN market.
Riverbed adds Ocedo
Application-performance specialist Riverbed acquired German startup Ocedo early this year to accelerate its software-defined WAN strategy. Riverbed, which didn't disclose financial details, said Ocedo provided it with SD-WAN gateways in both physical and virtual form factors and LAN-side connectivity among other capabilities. In April, Riverbed launched SteelConnect, an SD-WAN product that integrates Ocedo technology.
Berkshire Partners to acquire Masergy
Managed service provider Masergy, which integrated SDN into its platform, announced in October that it inked a deal with private equity firm Berkshire Partners to acquire it. Masergy, based in Plano, Texas, recently expanded into the software-defined WAN market via a partnership with SilverPeak.
Cisco grabs Jasper
Cisco – one of the more acquisitive companies in the IT industry – made a splash with its $1.4 billion acquisition of Jasper Technologies, a high-profile startup in the emerging Internet of Things market. Jasper's platform enables enterprises to manage IoT devices connected by cellular radios. For Cisco, the acquisition puts it closer towards its goal of transforming into a software company.
Cisco acquires CliQr
Cisco expanded its cloud capabilities with the acquisition of startup CliQr earlier this year. The vendor had already teamed with CliQr to integrate its application-focused cloud management software into Cisco's ACI SDN platform. Cisco said further integration of CliQr's technology across its data center portfolio would make it easier for customers to automate and manage application policies across hybrid cloud environments.
Cisco picks up ContainerX
Cisco leaped into the hot container market with its purchase of ContainerX, a small eight-person startup founded less than two years ago by former VMware, Microsoft, and Citrix executives. ContainerX developed an enterprise container management platform. Cisco said the deal supported its broader hybrid cloud infrastructure strategy.
Cisco buys Leaba Semiconductor
While much of Cisco's M&A focus is on software, it made a hardware deal earlier this year with the $350 million acquisition of Leaba Semiconductor, a fabless networking chip maker based in Israel. In announcing the deal, Rob Salvagno, head of Cisco's M&A and venture investment team, didn't reveal much insight into Cisco's plans for the acquired technology other than to say it will help speed product development.
Juniper buys BTI Systems
Juniper Networks acquired BTI Systems, a provider of cloud and metro network infrastructure technology to content, cloud and service providers. Juniper said the deal would allow it to address the fast-growing markets for data center interconnect and metro packet optical transport. "The close of this acquisition will pave the way for Juniper to help drive the industry toward a more open, automated and highly efficient IP and optical transport network," Jonathan Davidson, EVP and GM of development and innovation at Juniper, wrote in a blog post.
(Image: Juniper Networks)
Juniper acquires Aurrion
Juniper placed its bets on silicon phonetics with its acquisition of Aurrion, a fabless photonic manufacturer. "We expect that Aurrion's breakthrough technology will result in fundamental and permanent improvements in cost per bit-per-second, power per bit-per-second, bandwidth density, and flexibility of networking systems," Pradeep Sindhu, Juniper's founder who currently serves as vice chairman of the board and CTO, wrote in a blog post.
With Aurrion, Juniper expects it can "make significant improvements to the foundations of all our networking products within a relatively short time," he added.
Extreme acquires Zebra Technologies
Underscoring yet again the rapidly changing WLAN market, Extreme Networks agreed to acquire Zebra Technologies' WLAN business for $55 million. The deal came only about two years after Zebra bought Motorola Solutions' Enterprise business, including its WLAN technology, for $3.45 million. Extreme said the deal would bolster both its wired and wireless portfolio and provide it with in-house managed services and wireless IPS capabilities.