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TechNewsWorld.com

Cisco Aims at Data Center, Acquires FineGround

By Jay Lyman
May 26, 2005 1:19 PM PT

Computer networking giant Cisco continued its effort to compete beyond routers and switches and grab a foothold in the data center, where it has had weakness in the past. The company's presence in this area has been strengthened by acquisitions recently, including the latest: FineGround Networks, a popular data center appliance maker.

Cisco Aims at Data Center, Acquires FineGround

Cisco said by integrating its products with patented technology from FineGround -- used to accelerate, secure and monitor application delivery with efficient bandwidth and infrastructure use -- Cisco would provide application acceleration across networks for secure, optimized delivery of Web-based applications.

Analysts indicated Cisco's brand recognition and FineGround's reputation in the data center made the acquisition a good one, and may further Cisco's efforts to branch beyond the network and into the data center, which was also behind the company's recent acquisition of TopSpin, another data center business.

Convergence of Network and Apps

Cisco said it would acquire FineGround for approximately US$70 million in cash and options and, subject to standard regulatory and other approvals, the deal was expected to close by the end of July.

FineGround will become part of Cisco's Security Technology Group and the smaller company's chief executive officer, Nat Kausik, will continue to lead the team. FineGround products, which consist of application optimization technologies that reduce bandwidth usage and server stress, will be sold through Cisco sales and distribution channels while FineGround's technology will be integrated with Cisco's ongoing development, the companies said.

"This acquisition further enhances Cisco's strategy to converge application acceleration, security and a highly available network infrastructure seamlessly in the data center," said a statement from Cisco senior vice president and GM of Security Technology Jayshree Ullal. "FineGround augments Cisco's leadership in content and security products enabling customers to accelerate application response time and minimize costs."

Application Aspiration

Yankee Group senior analyst Zeus Kerravala told TechNewsWorld the acquisition was a good one, given the good reputation of FineGround's technology and its proximity to data center applications.

"There are different ways to solve application problems," he said. "FineGround has a solution that sits pretty close to the applications, and this is part of [Cisco's] overall data center strategy. It moves them closer to the computing side of things."

Kerravala said the acquisition's benefits will be bolstered by Cisco's strong brand name and a new set of buyers for the company's products, which will now include FineGround solutions.

DC Consolidation

Kerravala said although Cisco has struggled to address the enterprise data center market, it is offsetting its shortcomings with acquisitions such as FineGround, which caters to "the application guys" more than "the network guys."

The analyst added that the convergence of computer networks and data centers -- and of the vendors that supply the markets -- is likely to continue, following collaboration among Cisco and IBM and HP, Juniper with Redline, and consolidation among smaller players.

"That's ongoing," Kerravala said. "You'll see more of it as the network structure and the application structure intersect."


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