The Competitive Impact of Cisco’s Acquisition of Viptela Is Yet to Come

M. Fratto

Summary Bullets:

  • Cisco intends to acquire Viptela for $610 million (USD), but it’s one more SD-WAN product in a sea of products.
  • The competitive impact will take a year or more to be realized, and will largely be determined based on Cisco’s integration strategy.

Cisco Systems intends to acquire Viptela for $610 million. That’s a pretty good chunk of change for a company that already has two SD-WAN products, IWAN on the ISR routers and Meraki’s SD-WAN. Until the deal closes, Cisco and Viptela will be pretty quiet about future plans, but since Viptela will be added to Cisco’s Enterprise Networking Group, it is safe to say it will augment Cisco’s networking portfolio and at least, for a while, be offered alongside IWAN.

However, I don’t think the acquisition will have much competitive impact on the SD-WAN segment for a year or more. It’s really just another SD-WAN product owned by the 800-pound gorilla in networking. The bigger question awaiting an answer is: what does Cisco do with it?

Here are the opportunities Cisco is likely pondering:

  • Does Viptela replace IWAN as Cisco’s lead SD-WAN offering? I don’t see IWAN going away, but it could – and arguably should – become a secondary SD-WAN offering. That would be a solid strategy; if Cisco built interoperation between Viptela and IWAN, Cisco would have both a transition strategy from IWAN to Viptela’s product as well as a versatile SD-WAN product going forward. Viptela would also fit well within the company’s Enterprise NFV strategy, which brings network functions to the enterprise complete with a software and optional hardware run-time environment, as well as operational management. It would also be a good fit in Cisco’s Secure Agile Exchange, which is a suite of products and professional services designed to virtualize and automate public, private, and hybrid cloud application delivery.
  • Does Viptela bridge the gap between Cisco and arms-length Meraki? The software-only capabilities of Viptela seem like a good fit for the cloud service, which would add much-needed SD-WAN capabilities to Meraki and could bring the San Francisco business unit closer to the mothership. It’s already been five years since Cisco acquired Meraki in 2012, and the cloud-managed service might as well be a separate operating company. The integrations between Cisco and Meraki have been fairly minimal with no change in sight, and while I don’t think the Viptela acquisition will be the catalyst of change, it might make an inroad.
  • Does having Viptela stem the tide of MSPs and SPs that have been partnering with competitive SD-WAN vendors like Nuage Networks, Riverbed, Silver Peak, VeloCloud, and Versa? The number of MSPs and MSPs in waiting – think traditional resellers that want to get into managed services – is growing, and pure SD-WAN vendors are gobbling up the landscape. While the larger MSPs and SPs have indicated they want a multivendor service, few are actually offering one today. While it’s true that Cisco is almost always included in early multivendor SD-WAN services offerings, I think that’s more a side effect of having ISR routers in the field than on the strengths of IWAN.

One thing’s for certain: the SD-WAN segment was going to consolidate eventually, and this is the first of many acquisitions in the next two years that will shrink the SD-WAN vendor landscape.

What do you think?

Please log in using one of these methods to post your comment: Logo

You are commenting using your account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.