Cisco buys hot software-defined networking startup Tail-f for $175M

Cisco announced this morning that it has agreed to buy Tail-f Systems for $175 million. The company offers “multi-vendor service orchestration,” which essentially means that it provides a software layer that lets you manage a wide range of networking devices via a single interface.

“Our goal is to help to eliminate the bottleneck caused by operational complexity within the network,” Cisco senior VP Hilton Romanski said in a statement. “The acquisition of Tail-f … will extend Cisco’s innovation in network function virtualization.”

Clearly, Cisco plans to own software-defined networking (SDN) just like it owns networking.

Tail-f is one of 10 hot SDN startups featured in
The SDN Revolution: An Ecosystem Report on VB Intel

This deal brings Cisco’s recent SDN acquisitions to well over a billion dollars, as last year the company purchased another startup, Insieme, for $900 million. SDN has been compared to Android versus Cisco’s iOS, as it disaggregates networking hardware and software and allows multiple players to enter the field with different innovations.

As such, it’s an existential threat to Cisco, but one to which the company is responding aggressively — and acquisitively.

“Tail-f has filled an important niche in the new SDN networking approach, the goal of which is to build a new software-based network built of open, dynamic components,” industry analyst Scott Raynovich says. “Cisco has shown it wants to move fast … the company is serious about building out an SDN ecosystem — or at least beating others to the punch.”

Cisco says that Tail-f’s software will accelerate its cloud virtualization strategies while “supporting Cisco’s long-standing commitment to open standards, architectures, and multi-vendor environments.” That statement itself, with words like open standards and multi-vendor, is evidence of how big the SDN threat really is to Cisco’s estimated $20 billion earnings from its leadership position in the legacy networking market.

Cisco also says the acquisition will position it better for helping companies manage the explosion of people, devices, and sensors being interconnected across the “Internet of everything.”

Tail-f is headquartered in Stockholm, Sweden, and last took funding of $6.3 million in 2011, primarily from the Swedish VC firm SEB Venture Capital.

Tail-f employees will join Cisco’s cloud and virtualization group. The acquisition is expected to close in Cisco’s fourth quarter.

“We’re looking forward to bringing our open, standards-based and model-driven service orchestration NCS software to more customers and partners as part of Cisco’s global presence,” Tail-f CEO Fredrik Lundberg said in a company blog post.