Cisco grabs-up SD-WAN player Viptela for $610M

Cisco has padded its SD-WAN portfolio with fellow player Viptela for $610 million.

The deal will be a homecoming for Viptela’s top execs as current CEO Praveen Akkiraju is a former Cisco and Dell EMC. Co-founders of Viptela Amir Khan and Khalid Raza were engineers at Cisco.

“Cisco has been providing SD-WAN technology and services to customers for several years; the Cisco IWAN solution delivers an on-premises SD-WAN solution for customers needing advanced routing features and other advanced network services, and Cisco Meraki provides a cloud-based solution for customers needing maximum simplicity and unified threat management functionality in their SD-WAN solution. Acquiring Viptela will enable us to expand our portfolio, with increased functionality delivered through the cloud,” wrote Rob Salvagno Vice President of Corporate Business Development at Cisco wrote in a blog post on the deal.

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With Viptela, Cisco can offer customers more choice in their enterprise branch offices and WAN deployments, with a SD-WAN solution that is easy to deploy and simple to manage. “Together, Cisco and Viptela will be able to deliver next generation SD-WAN solutions to best serve all size and scale of customer needs, while accelerating Cisco’s transition to a recurring, software-based business model. Viptela will join the Enterprise Routing team within Cisco’s Networking and Security Group led by Senior Vice President and General Manager David Goeckeler,” Salvagno wrote.

Signed to be CEO this past January Akkiraju said at the time: “2017 will be the year of SD-WAN and we expect rapid adoption of the technology going forward. We are in an amazing time of enterprise transformation where traditional applications are being deconstructed and being rebuilt in the cloud. Traditional networks are amid the same kind of disruption and Viptela can lead that transformation.”

One of the greatest challenges going forward is connecting users at the edge of the network, securely with the cloud, Akkiraju said. There is also a need to support a diversity of devices needing connectivity – everything from MPLS to LTE—to get to cloud services.  

Akkiraju noted that Viptela hosts 90% of its software-defined wide area networking (SD-WAN) customers in Amazon Web Services (AWS).

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In December Gartner wrote that spending on SD-WAN products will rise from $129 million in 2016 to $1.24 billion in 2020. “While WAN architectures and technologies tend to evolve at a very slow pace — perhaps a new generation every 10 to 15 years — the disruptions caused by the transformation to digital business models are driving adoption of SD-WAN at a pace that is unheard of in wide-area networking,” Gartner wrote.

Earlier this year Cisco made several SD-WAN predictions for 2017 including:

• Flexible hosting options: Cloud applications are changing how branches are designed. Branches are becoming like smaller campus networks connecting to public clouds, co-location facilities and the data center. SD-WAN will need to be flexible enough to be hosted in each of these locations in both hardware and software (virtualized) form factors without compromising on performance or management simplicity.
• Improved security capabilities: SD-WAN has primarily been about securing connectivity between locations using a secure overlay. However, connecting branches directly to the internet is critical for improving the performance of applications hosted in the cloud, but it can also expose your branch threats. Expect to see security become more integrated into branch platforms and complemented by cloud-based security and analytics for faster threat detection for web, SaaS and even encrypted traffic.
• Virtualizing the branch: SD-WAN, Next Generation Firewall and WAN Optimization might still be required in the branch but enterprises want more flexibility to deploy and consume network functions as needed rather than all at once in a single platform. Expect to see more virtualization of traditional, physical network functions in the branch combined with broader automation capabilities that will reduce deployment time and increase agility.
• Increased managed service offerings: The opportunity to provide enterprises with additional services like security, monitoring and application optimization, beyond basic connectivity is a compelling value proposition of SD-WAN for providers. Expect to see more service providers offer SD-WAN as a managed service as well as resellers, systems integrators and IT services companies who are looking to expand their service offerings by giving enterprises more choice.

Viptela to date has received about $110 million in funding from primary investor Sequoia Capital, Redline Capital and Northgate Capital. Viptela competes most closely with a band of fellow startups including VeloCloud, CloudGenix, Cybera, Versa and Talari as well as established venders such as Juniper, Riverbed Technology, Silver Peak and Citrix. The acquisition, Cisco’s second this year – the other being $3.7 billion for AppDynamics — is expected to close in the second half of calendar 2017, after having completed all the customary closing conditions and regulatory review.