Cisco Buys Wi-Fi Networking Firm Meraki for $1.2 Billion

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Networking giant Cisco has announced plans to purchase a company called Meraki for $1.2 billion in cash and retention incentives. Meraki makes Wi-Fi networking technology that appeals to many small to mid-size enterprises.

ZDNet’s Larry Dignan explained, “The privately held company, which has about 330 employees, has midmarket customers that Cisco can’t reach. Meraki counts Applebee’s, Starbucks, a bevy of school districts and state and local government customers. In a nutshell, Meraki’s technology provides Wi-Fi, switching, security and mobile device management via a centralized cloud platform. Meraki appeals to midmarket customers because they don’t have to deploy more IT staff to build out their networks.”

Bloomberg BusinessWeek’s Jordan Robertson reported, “[Cisco] Chief Executive Officer John Chambers is seeking to capitalize on the boom in demand for smart phones and tablets in the workplace by snapping up a company that helps businesses manage security and wireless access points via the Internet. The deal is aimed at broadening his customer base as Cisco cuts costs, shuts underperforming divisions and trims prices to fend off rivals such as Hewlett-Packard Co. (HPQ) and Juniper Networks Inc. (JNPR).”

PCMag quoted Cisco’s Rob Soderbery who said, “The acquisition of Meraki enables Cisco to make simple, secure, cloud managed networks available to our global customer base.”

Doug Leone from Sequoia Capital, which had invested in Meraki, blogged, “Quick: when was the last time you plugged in an Ethernet cable? If you have trouble answering that question, you’re one of the reasons why Cisco has agreed to acquire Meraki. Six years ago Sanjit, John and Hans saw our Wi-Fi world before many others. Meraki offered smaller wireless ISPs a complete package to roll-out wireless networks without a lot of time, money or expertise. It gave upstart ISPs a way to enter new markets and disrupt existing ones. The benefits were obvious: the ability to scale without wires, low cost of entry, ease of use, and network analysis tools to help operators maximize revenue from their small networks.”