Cisco Systems this week announced plans to acquire Jahi Networks, a start-up that makes network management appliances for enterprise firms.
The US$16 million deal would give Cisco products and technology designed to tie together various network devices and manage them as a single system.
Closely held Jahi Networks, based in San Jose and Hyderabad, India, makes products aimed at tying together disparate network gear and providing a common management interface for switches, routers, security products and other hardware, Cisco says. Whereas enterprise network administrators commonly write custom scripts, or even whole applications, to manage different devices, the Jahi technology lets users view network gear as "virtual devices" and configure these devices through one application.
The acquisition is expected to close in the first quarter of 2005. Jahi Networks' 20 employees will become part of Cisco's Network Management Technology Group, which develops CiscoWorks network management software and other management technologies.
Making various boxes on a network behave more like a unified system has been a focus for Cisco in the last few years. Cisco says such networks would be less expensive to manage for enterprise customers, and provide greater reliability and security.
This has been the focus of Cisco Chief Development Officer Mario Mazzola, who has previously stated that Cisco is taking more of a system approach to building products, as opposed to concentrating on just feeds and speeds in network devices. "This will be necessary in the shift from (product-level) resiliency to system resiliency," he said at the company's analyst meeting late last year.
Of course, no other vendor is in a better position to do this, as Cisco owns more than two-thirds of the LAN switch and WAN router markets, according to the Dell'Oro Group. Observers say Cisco's systems approach to network gear is aimed squeezing more revenue out of the low-growth router and switch markets by selling premium services - such as its NAC security architecture, or AVVID convergence technology - that ride on top of an end-to-end Cisco infrastructure.
And customers are buying it, analysts say. A survey in August of 100 CIOs by Goldman Sachs showed that more than 53 percent plan to increase their spending on Cisco gear in the next 12 months; 35 percent said they would spend the same, and only 12 percent said they would buy less Cisco gear.