Cisco to increase stake in data center technology vendor Insieme for $863 million

Network equipment vendor Cisco Systems will increase its stake in data center technology vendor Insieme for around $863 million.

The strategy is to protect its core business from new competition.

Cisco, which already owns 85 percent of Insieme, also unveiled the start-up’s first products. They are Cisco’s answer to software defined networking (SDN) technology, Reuters reported.

Because SDN technology can run on cheaper hardware than Cisco’s expensive routers and switches, the network hardware leader needed to find a way to protect its equipment sales.


Rivals who have been gaining attention in SDN include privately held Arista Networks as well as VMware, which created waves in the industry when it bought SDN start-up Nicira in 2012 for over $1 billion. Juniper Networks and Hewlett-Packard are also Cisco competitors in the sector.

“Cisco continues to promote the role of hardware in delivering future high performance networks and took great pains to distance itself from pure software based overlay virtualized networks (like the Nicira technology VMware acquired, Junipers Contrail, and Alcatel-Lucent’s Nuage) in the data center,” said David Krozier, principal analyst, Network Infrastructure, Telecoms, Ovum.

Insieme was launched in early 2012 with a $100 million investment from Cisco, followed by a $35 million round of funding in November 2012.

The Insieme products are being unveiled by Cisco CEO John Chambers at a New York event on Wednesday.

The products include the Nexus 9000 family of network switches and a software controller it is calling the Cisco Application Policy Infrastructure Controller (APIC).

The controller was designed to centralize data center management for everything from network, storage and computing equipment to applications and security.

By combining central management with its own hardware, Cisco is promising total cost-of-ownership savings of 75 percent, compared with software-only management systems.

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