Cisco enters storage fray with $415m Whiptail acquisition

Acquisition could put further strain on Cisco's relationship with EMC, VMware

Networking giant Cisco is to buy scalable solid state memory system provider Whiptail in a deal worth about $415m.

According to Cisco, the deal would strengthen its Unified Computing System (UCS) strategy and allow it to better support applications by integrating scalable solid state memory into the "UCS's fabric computing architecture".

The acquisition marks Cisco's first move into the storage market, and puts a question mark over its existing partnership with storage vendor EMC.

EMC had provided storage components for Cisco's UCS, and alongside Cisco and virtualisation provider VMware, it formed a joint venture called VCE.

VCE was established in 2009, and has an end to end data centre solution spanning hardware and software, dubbed Vblock.

VMware itself has made acquisitions that overlap with Cisco's offerings, such as its $1.2bn purchase of software defined networking start-up Nicira last year. The acquisition led to the launch of VMware's NSX network virtualisation platform, with 20 vendor partners signed up to support it, but Cisco was not mentioned as one of those.

This led to industry experts suggesting that the relationship between VMware - the majority of which is owned by EMC - and Cisco, is under strain.

However, there has been no public announcement from any of the three firms on the future of VCE, and as VMware and Cisco are still building their portfolios in unfamiliar territory it may be a while yet before they decide to bid farewell to the partnership.

This calendar year, Cisco has been on the hunt for mobile and cloud acquisitions as it focuses on ensuring it has the technologies needed to manage the "Internet of Things". In January, it acquired mobile network management provider Intucell for $475m and in March it bought cloud services provider SolveDirect.

While the deal for Whiptail doesn't fit into the same bracket of offerings, Cisco wants to better support new forms of applications that are a product of trends such as virtualisation and big data.

"We are focused on providing a converged infrastructure including compute, network and high performance solid state that will help address our customers' requirements for next-generation computing environments," said Paul Perez, vice president and general manager, Cisco computing systems product group.

As part of the deal, Whiptail employees will be integrated into the computing systems product group at Cisco, under the management of Perez. Cisco will pay about $415m in cash and retention based incentives in exchange for all shares of Whiptail.

The acquisition is expected to be completed in the first quarter of fiscal year 2014, subject to customary closing conditions.