Cisco Acquires Storage Maker Whiptail; EMC Alliance In Jeopardy?


Cisco Tuesday made a major move in the storage market with its plan to acquire Whiptail, a maker of solid state memory and data storage systems, for $415 million.

The deal, according to Cisco, will help its Unified Computing System (UCS) -- a bundled solution combining networking, servers, storage and virtualization under a single management console -- better support a new breed of applications being created from trends like big data and the Internet of Everything. Cisco specifically said it plans to integrate Whiptail's solid state memory into its UCS fabric computing architecture.

The deal, expected to close in the first quarter of 2014, also calls into question Cisco's long-running partnership with EMC, which has traditionally provided storage components for UCS.

[Related: Partners Urge Cisco To 'Catch Up' In Wake Of VMware SDN Offensive]

Cisco's partnership with VMware, the majority of which is owned by EMC, has also showed signs of strain since VMware's $1.2 billion acquisition of SDN startup Nicira last year. VMware last week cemented its SDN strategy with the launch of its new NSX network virtualization platform. VMware said at the time that it signed on 20 vendor partners to support the NSX "ecosystem," with Cisco being noticeably absent from the list.

Cisco's ties with both EMC and VMware are the foundation of the VCE joint venture launched by the companies in 2009.

A CEO for a large Cisco and EMC enterprise partner, who did not want to be identified, said he sees the partnership as a big blow to VCE.

"I think VCE is going to fall apart," said the CEO. "Cisco is buying Whiptail and partnering with NetApp. It looks to me like Cisco and EMC are at odds and VCE is going to lose the C (as in Cisco)."

The CEO speculated that the Cisco deal could once again raise the spectre of EMC buying a server vendor pushing and Cisco and EMC further apart. "I can't bet my company on VCE," said the CEO.

In a statement to CRN, Cisco said the Whiptail deal won't affect its partnerships with either EMC or NetApp. "This acquisition is really about the server market. It's a significant opportunity, but distinct from the portion of the market served by traditional stand-alone storage systems. As a result, our continued engagements with NetApp on FlexPod, EMC on VSPEX and VCE on Vblock will not change. We have no current plans to expand into the broad based, traditional storage market."

Jayson Noland, senior research analyst of IT Systems & Networking at industry analyst firm Baird, said he wasn’t surprised to see Cisco making a push into the storage market. "We've been talking about Cisco getting into storage forever and here they are," he told CRN.

Noland and other Baird analysts wrote in a research note Tuesday that "Cisco moving into next-gen storage was only a matter of time given their goal of being the 'best IT company in the world' and VMware’s 2012 acquisition of Nicira. Over-time, we would not rule out adjacent acquisitions or organic development in software-defined storage, PCIe, cloud connected, and analytics."

In a blog post announcing the acquisition, Cisco said Tuesday that Whiptail is the "perfect architectural fit for UCS."

"By making this acquisition, Cisco is enhancing the Unified Computing System (UCS) by bringing solid-state memory acceleration into the compute tier as a managed subsystem," wrote Hilton Romanski, head of business development at Cisco.

Romanski added, "The end result is to deliver optimized performance on top of UCS for emerging and business critical applications, such as virtualized, Big Data, database, High Performance Computing and transcoding workloads."

Since its debut in 2009, Cisco UCS has grown to become the number two x86 blade server platform worldwide, Romanski wrote. In an interview with CRN earlier this year, Cisco said its UCS business is now valued at $2 billion, with over 20,000 customers adopting the system in the last four years.

Cisco said employees of Whiptail, Whippany, N.J., will be integrated into Cisco's Computing Systems Product Group led by Paul Perez, vice president and general manager. Under the terms of the agreement, Cisco will pay approximately $415 million in cash and retention-based incentives in exchange for all shares of Whiptail.