Five acquisitions Cisco intensive integration for self-redemption (innovation comes from small and beautiful companies, Cisco does not want to stifle this innovation)

Half a year five acquisitions Cisco intensive integration for self-redemption

Wu Micro

Cisco, a "takeover guru", recently announced a new deal.

The acquisition was Cloudlock, a cloud security company, with a total transaction price of $293 million. This is the fifth takeover deal that Cisco has launched this year.

As the world's largest network equipment manufacturer, Cisco pioneered the "Internet of Everything", cloud computing, big data, and so is its transformation to the digital enterprise important content. Several acquisitions, including the takeover, were seen by insiders as another move by Cisco to "redeem" itself. However, this is not obvious for Cisco's performance, market capitalization.

More worrying for many in the industry, Cisco has chosen a "crowded" road full of rivals. Cisco, which has yet to form its own competitive edge, is doomed to break.

Increasingly "soft" acquisitions

Cisco's development process has always been accompanied by acquisitions. Public information shows that Cisco has launched an acquisition almost every six weeks.

The acquisition of cloud security company Cloudlock, Cisco has been a succession of acquisition of IoT startups Jasper Technologies, Hybrid cloud service provider CLIQR, chip manufacturer Leaba, Cloud search technology start-up enterprise Synata.

It is worth mentioning that in February, Cisco bought IoT platform supplier Jasper Technologies for $1.4 billion, not only the biggest deal for Cisco in the last two years, but also seen by many in the industry as one of the largest mergers in the IoT sector. After the merger, Jasper not only provides Cisco with an Internet of things platform, but also expands its IoT services, such as Cisco's security and advanced analytics.

Cloudlock, the recently acquired Cloud security company, is primarily used to strengthen security technologies in the cloud. The March acquisition of Cloud search technology start-up Synata is the end-to-end encryption service for Cisco Spark, a cloud-based collaboration service that is designed to support it.

The $260 million acquisition of CLIQR, also launched in early March, is the technical essence of helping customers screen out the most appropriate cloud service providers.

"Not only have these five acquisitions, Cisco's many acquisitions in recent years around the cloud computing, big data and other software and services in the area of Cisco Cloud computing and digital services insiders pointed out that with the hardware more standardized, software to the hardware to the soul, the IT industry innovation more and more in the software sector. Cisco, which relies on hardware such as routers and switches, is increasingly taking place in software and services.

Generally, the success of a business acquisition is not the same as whether the risk of acquisition is controllable and whether the acquisition is consistent with the company's long-term development direction and interests of the two major standards.

The person confessed that the acquisition of the target must be in line with the general direction of Cisco transformation. Nick Earle, senior vice president of Global cloud services, made clear to the media two years ago that Cisco has initiated acquisitions of up to 173 in recent years, all related to cloud computing and big data.

In fact, the acquisition of Leaba, a semiconductor company, in five acquisitions this year, is one of Cisco's few hardware acquisitions in recent years. It is learnt that Leaba's product acquisition will become a part of Cisco's core hardware. In this respect, the person also said that the acquisition of hardware is ultimately to expand the extension of software and services.

Specific to the acquisition model, compared to many enterprises to adopt the "Snake Swallow Elephant" acquisition model, easily spend tens of billions of dollars, it is inevitable that the integration is not in place, rejection and other reactions. Tracking Cisco's multiple acquisitions, the amount is generally less than double digits, more like "little" "Take Doctrine" appears more prominent.

"This is not only the acquisition model of Cisco, but also a popular acquisition style for foreign IT companies," Wang Yanhui, founder of the Mobile China Alliance, admits that the small amount of acquisitions, the difficulty of integration, the risk factors of failure are relatively controllable, and that the technology giants have become oligarchs and barriers to entry in hardware, and it is harder to find a suitable bid. and software, services and other fields are flooded with small enterprises, and the software derivative is the service, which is also the current Cisco and other representative of the international IT giants from the hardware to the "Software + service" direction of the need to transform.

He June, general manager of cloud computing and digital services in Greater China, said last year to the media that "the new it era really cannot be used with traditional thinking and innovation comes from small and beautiful companies, and Cisco does not want to stifle this innovation." ”

More and more difficult to chew "Bones"

Behind the frequent acquisitions is Cisco's strategic transformation.

According to the John Chambers of Cisco's soul character, 2010 to 2030 will not be the information age, but the digital age. He made it clear that the "Internet of Everything" would drive Cisco's next 10-year growth.

Cisco launched the "Internet of Everything" strategy for the first time at the end of 2012. It is also the first company to commit to "everything connected IoT". The vision of connecting all of the world's clouds to a unified global data platform--intercloud. Through Intercloud, Cisco wants to connect isolated clouds, unlock data barriers, and drive a new wave of connected things. It is seen as a development engine for Cisco's strategic transformation.

Cisco's business structure has also changed, around the "Internet of Everything" strategy. Data center virtualization, software, security, cloud, etc. are seen by Cisco as a key growth area, especially in the data center business.

"Cisco's strategic Transformation path is clear, but the pull on performance is not obvious. One IT industry observer pointed out that Cisco, after restructuring in May 2011, was clearly aware of the need to find new growth poles in areas such as software and services beyond traditional hardware.

However, nearly three years of earnings data show that the traditional product category income accounted for more than 70%, service income is still less than 30%. The 2015 fiscal year report showed that service income accounted for 23.2%, down 0.1% compared to fiscal 2014. Specific to the business revenue, routers, switches and so on still occupy nearly half of the total revenue. The data center business is only $3.22 billion, accounting for only 6.55% of total revenue, and 2014 for fiscal 5.6%.

At the same time, the "Internet of Everything" strategy has not significantly increased the market value of Cisco. As of July 5 this year, Cisco shares closed at $28.43, a market value of about $142.995 billion, less than March 28, 2001, the Cisco $555.44 billion peak of 1/3.

Many people in the industry, the current "cloud computing" "Big Data" is the innovation of IT industry two major trends, but also a coin on both sides. Cisco's chosen path to transformation is undeniable, but crowded and filled with rivals.

According to the latest first-quarter data released by Synergy, AWS still dominates the cloud services market with a 31% market share, with Microsoft, IBM, and Google at the second tier, accounting for 22% of the market share. According to an analysis published last August by Gartner, the industry consultancy, AWS has a computing power of up to 5 times times the sum of 14 competitors ' computing power. The second-tier Microsoft and Google have also struggled to catch up with an annual increase of more than 100% per cent.


"The current cloud computing landscape is dominated by the enemy and is in the forefront." Cisco does not plan to violate the trend of the industry, but to seek a place and lack of their own differentiated competitive advantage. "Henyep Securities (7.690,-0.02,-0.26%) An IT industry analyst, who declined to be named, said Amazon was the first to lay out cloud computing in 2006, and its e-commerce and computing capabilities had an absolute advantage. And Microsoft in the field of personal and enterprise software, Google in the field of Web search and advertising algorithm has formed its own competitive barriers.

It is clear that Cisco is aware of its lack of a head start in cloud computing software and platform creation, and its awkward identity as a killer. When it presents the internet of things strategy, it says it will focus on cloud computing software and hosting services.

However, this also seems too ideal.

"It Enterprise cloud computing business is not a clear, but the integration of each other." The analyst said Amazon, Microsoft, and so on, in addition to providing the platform, software, are accompanied by the provision of hosting services, on the other hand, Cisco hopes to open up the Amazon, Microsoft, Google and other closed cloud environment, "so Cisco is directly out", the analyst said, the value of imaginative cloud computing market, There is little chance of leaving the striking.

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Five acquisitions Cisco intensive integration for self-redemption (innovation comes from small and beautiful companies, Cisco does not want to stifle this innovation)