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Cisco has announced the $2.35 billion acquisition of Duo Security, adding two-step authentication services to the networking company's cloud-based security portfolio.
Cisco said this week it expects to close the cash deal by the end of October. Following the Duo acquisition, Cisco will make Duo part of its security business under its general manager and executive vice president, David Goeckeler. Duo, which has 700 employees, will remain at its Ann Arbor, Mich., headquarters, and CEO Dug Song will continue to lead the company.
Under Cisco, Duo could grow much faster than it could on its own by gaining access to Cisco's 800,000 customers. Duo, which was founded in 2009, has 12,000 customers.
Cisco wants to buy Duo to strengthen its cloud-based security services. Duo offers two-factor authentication that companies can integrate into websites, VPNs and cloud services. Duo services can also determine whether the user device trying to access the corporate asset poses a security risk.
The Duo acquistion adds another set of capabilities to those provided by Cisco's other cloud-based security products, including OpenDNS and Stealthwatch Cloud. OpenDNS blocks malware, phishing attacks and botnets at the domain name system layer. Stealthwatch Cloud searches for threats by aggregating and analyzing telemetry drawn from public cloud infrastructures, such as AWS, Microsoft Azure and Google Cloud Platform.
Cisco's plans following Duo acquisition
During a conference call with reporters and analysts, Goeckeler said Cisco will sell Duo as a stand-alone product, while also integrating its services into some of Cisco's other cloud-based services. He did not provide details or a timeline, but noted other cloud-based products that Cisco has combined with each other include OpenDNS, the Viptela SD-WAN and the cloud-managed Meraki wireless LAN.
"We think we can drive [more] integrations here," Goeckeler said of Duo. He later added Duo could bring more value to Cisco Umbrella, a cloud-based service that searches for threats in internet activity.
"Duo is another asset we can combine together with Umbrella to just increase the value of that solution to our customers," Goeckeler said.
Cisco has been growing its security business through acquisition since at least 2013, when it bought firewall provider Sourcefire for $2.7 billion. In 2015, Cisco acquired OpenDNS for $635 million, and it bought CloudLock a year later for $293 million. CloudLock provides secure access to cloud applications, including those running on platform-as-a-service and infrastructure-as-a-service providers.
"All of these pieces are part of the larger strategy to build that integrated networking, security and identity cloud-delivered platform," Goeckeler said.
Cisco's acquisitions have fueled much of the growth in its security business. In the quarter ended in April, Cisco reported an 11% increase in security revenue to $583 million.