Cisco launches app performance strategy with FineGround buy

To break ground in the application performance market, the networking giant is spending $70 million for vendor FineGround. One analyst says it's likely the start of a major new applications initiative for Cisco.

Networking vendor Cisco Systems Inc. today announced its purchase of FineGround Networks Inc., and it could indicate the addition of many new application optimization products in its product portfolio.

Cisco, now with the help of its newly acquired application performance management vendor, plans to evolve server and storage gear to handle data more securely and efficiently.

The networking giant has agreed to pay $70 million for Campbell, Calif.-based FineGround, which has been in the application performance management market for more than four years. Cisco predicts the transaction, which is subject to regulatory approval, will close by the end of its fourth quarter, or by July 30.

FineGround develops network equipment that enhances end user application response times by up to five-fold, reduces application bandwidth usage by up to 90% and significantly reduces the load placed on application servers.

FineGround's Enterprise Application Delivery (EAD) Suite, unveiled in December 2004, combines an appliance that monitors, accelerates and secures data from applications made by IBM Lotus, Oracle Corp., SAP AG, Siebel Systems Inc. and others with complementary client-based software tools monitoring performance.

Joel Conover, principal analyst with Sterling, Va.-based research firm Current Analysis Inc., said Cisco's network optimization investment in FineGround was mostly likely spurred by Juniper Networks Inc.'s recent acquisition of competing WAN optimization specialist Perabit Networks.

But Cisco's interest in the application optimization market has been incubating since 2000, as Cisco has been quietly ramping up a new division that is expected to lead a major product push in the near future.

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Conover said the mission of Cisco's new application-oriented networking (AON) business unit is to make its networking gear more intelligent when working with applications and Web services in order to better compete with XML hardware products.

During a demonstration at last week's SAP Sapphire user conference, CNET News.com reported that the vice president and general manager of Cisco Systems' new AON business unit, Taf Anthias, previewed a pair of upcoming devices intended to help admins derive more detail about network traffic by creating direct ties between network devices and applications.

Cisco's mission, Conover said, is to enable devices to monitor the contents of traffic, rather than simply pass packets along to other portions of the network.

Conover said Cisco did not originally intend on going public with this initiative as soon as it did, but changed its mind as information about the AON business unit became known to the public.

Conover said he has high expectations for AON and the other investments, and he predicts Cisco will soon be making in this arena.

"Purchasing FineGround is the first action Cisco has taken in this market," he said. "I expect AON to be the next billion-dollar market for Cisco, and I assume they'll soon be making many more investments to get themselves fortified in this market."

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