In the past couple of years, Cisco has been on the move to create solutions for simple cloud transitioning for business and large corporations. After creating a coalition with EMC and VMware, VBlock was created as a rack to simply transition company networks to private cloud networks. Now in another step to create the need for simple cloud integration, Cisco has funded an advanced start-up company known as Insieme for $100 million. However, another condition in the advance is the option to later purchase Insieme for an additional $750 million.
Purchasing the Asset:
The advance to Insieme was not just an investment opportunity. Founded by 3 Cisco employees, Insieme was created for later purchase by Cisco. This is known as a “spin-in” company. The reasoning behind spin-in companies is to create products and services that benefit the parent companies. This allows for the separate identity to be purchased later to boost a company’s portfolio.
As Cisco has been concentrating on cloud computing and the abilities within business networks, the Insieme purchase only makes sense. Insieme’s development in S.D.N. or software-defined networking is closely related and highly beneficial to what Cisco has been doing. Insieme’s internal program will play an important part in Cisco’s programmable framework. As cloud transitioning increases in ease and scalability, the S.D.N. will assist in the future launches of Cisco products to create a software based cloud integration solution.
The Future of Cisco:
There has been a lot of speculation as to who will be the leader in S.D.N. With mention of Cisco, Juniper Networks, Alcatel, and NEC, the race is on to claim the number one spot. However, with 70% of the world’s networks running Cisco products, they may have a head start. With their new easy installation cloud products, these companies currently running Cisco products will be able to slide in a new rack, program the private cloud network and easily implement S.D.N.
Current employees of Cisco are torn regarding the purchase of Insieme. As the most valuable employees will be positioned to become multimillionaires with little risk, others will only be able to watch as it happens. However, the purchase of Insieme will still increase Cisco stocks and lead the way to innovations that will put the company ahead of the others in S.D.N. development and sales.
Two other spin-in companies have been created for Cisco. They purchased Andiamo Systems in 2004 for $750 million and Nuova Systems in 2009 for $678 million. Each of these companies benefitted Cisco by quickly placing them into markets they weren’t previously in. Andiamo Systems allowed Cisco to break into the storage-related switch market as Nuova allowed Cisco to develop and sell its own line of computer servers. With the increasing success of these spin-in companies, it begs to question “Will this be the future of business?”
Joshua Harper is a tech writer and contributes reviews on networking devices such as the Cisco SFP transceiver to various tech blogs.