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Cisco-Springpath buy carries intellectual property control

The Cisco-Springpath acquisition places crucial HyperFlex technology under the networking vendor.

Cisco intends to acquire partner Springpath -- a move that would bring under the networking company's control the...

Silicon Valley startup that co-engineered Cisco's hyper-converged infrastructure system, called HyperFlex.

Cisco said this week it would pay $320 million in cash for Springpath and make it a part of the computing systems product group run by Senior Vice President Liz Centoni. Completion of the Cisco-Springpath acquisition is expected by the end of October.

Cisco worked with software-defined-storage-maker Spingpath in developing the HyperFlex system, which hit the fast-growing hyper-converged infrastructure system (HCIS) market last year. At the time, analysts predicted a Cisco-Springpath acquisition was likely if the co-development work were successful. Cisco was an investor in the startup.

"I think this was a natural for Cisco," said Dan Conde, an analyst at Enterprise Strategy Group Inc. in Milford, Mass. "Given their close collaboration, it creates a smooth path for Cisco customers to get a better hyper-converged infrastructure solution from Cisco."

Cisco-Springpath buy on the heels of HPE Simplivity acquisition

The Cisco announcement came six months after rival Hewlett Packard Enterprise completed the $650 million acquisition of SimpliVity, which also made hyper-converged storage products. "HPE's purchase of SimpliVity put some pressure on Cisco to find a way to create a complete HCI solution," Conde said.

It's a smart move on Cisco's part, because it gives them ownership of the core intellectual property enabling their HyperFlex product.
Richard Ficheraanalyst at Forrester Research

The Cisco-Springpath purchase places under Cisco nearly all of HyperFlex's core technology, which might help speed up development. Cisco is playing catch-up in the market. It released HyperFlex more than a year after rivals Dell and HPE launched branded hyper-converged products.

"It's a smart move on Cisco's part, because it gives them ownership of the core intellectual property enabling their HyperFlex product," said Richard Fichera, an analyst at Forrester Research. "A hostile acquisition of Springpath would have made their lives more difficult. As it is, they have acquired both the IP [intellectual property] and a very talented development group with very strong software-defined storage skills."

Cisco claims HyperFlex has "significant momentum" in the market. Over the last year, Cisco has garnered more than 1,800 customers, according to the company.

A hyper-converged infrastructure system uses a software-centric architecture to tightly integrate compute, storage, networking and virtualization resources in a commodity hardware box supported by a single vendor. Cisco's HyperFlex comprises software-defined storage, data services software and Cisco's x86-based Unified Compute System.

In 2016, global sales of hyper-converged systems topped $2.2 billion, an increase of 110% year over year, according to IDC.

Next Steps

Choosing between hyper-converged and converged IT infrastructure

Why a hyper-converged network remains a pipe dream

Tackling storage and server strain in hyper-converged systems

Dig Deeper on Data Center Network Infrastructure

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