Meraki partners saw Cisco deal coming

Cisco is buying cloud-based upstart to snuff out competitive threat, partners reckon

Meraki's founders have pledged to build the cloud-based wireless LAN vendor into a $1bn business, despite the news it is to be acquired by Cisco.

Following widespread rumours on Twitter over the weekend, Cisco has confirmed it is grabbing the San Francisco-based outfit for $1.2bn in a move that came as little surprise to partners.

In a letter to employees, Meraki chief executive Sanjit Biswas admitted he initially rebuffed Cisco's advances on the grounds that the firm was plotting a flotation on the stock market. He said he was won round by the networking goliath's promises that the firm, which will be known as Cisco's Cloud Network Group, will retain its culture and identity.

Just six years after it was founded by three MIT PHD candidates, Meraki has 330 staff and a bookings runrate of about $100m.

"As founders, all three of us plan to stay on as leaders of the business unit and look forward to continuing towards our goal of $1bn in annual revenue," Biswas wrote.

Biswas, who will stay on alongside Meraki's other two founders, said the firm would continue to release new features and products in the years ahead, as well as hopefully "cloudifying" other Cisco products.

If you can't beat 'em, join 'em

In the UK, Sequoia Capital and Google-backed Meraki has about 110 partners, most of which buy through distributor Cloud Distribution.

Cloud Distribution director Scott Dobson said he had seen the deal coming because Meraki had become a thorn in Cisco's side.

"Cisco could see Meraki starting to snap at its heels in a lot of midmarket deals and had no technological response to its cloud management platform," he said. "It was a case of if you can't beat them, join them, and I would have thought Cisco had been courting them for at least 18 months."

Vincent Booth, director of Meraki partner Solved IT, agreed that Meraki had pitted itself squarely against Cisco on its website.

"When we've pitted Meraki against other technologies such as Cisco, we have always found the wireless reach has far surpassed anything else we've tried," he added.

"If you were to put in a Cisco solution, you would be spending $25,000 on a controller, whereas with Meraki you don't have that onsite controller as it is all in the cloud. That is what Cisco has recognised."

Adam Jarvis, chief executive of Meraki and Cisco partner Intrinsic Technology, said: "Cloud services are absolutely central to our future development, so it's great to see one of the major vendors prioritising them too. Cisco's 'Cloud Networking Group' vision sits very tightly with our own view of where enterprise IT is heading, and the commitment to preserving Meraki's focus on customer experience is reassuring."

Rob Soderbery, senior vice president, Cisco Enterprise Networking Group, said: "The acquisition of Meraki enables Cisco to make simple, secure, cloud-managed networks available to our global customer base of mid-sized businesses and enterprises. These companies have the same IT needs as larger organisations, but without the resources to integrate complex IT solutions."