Cisco acquired Meraki on Sunday for $1.2 billion. Meraki is a privately held company that specializes in cloud-based management of wireless LAN, security appliances, and mobile devices for midmarket companies.
HOT MARKET: Top Tech M&A deals in 2012
But analysts see Meraki's infrastructure playing a much broader role at Cisco over time. Indeed, Meraki becomes Cisco's new Cloud Networking Group.
"Meraki is to become the new 'Cloud Networking Group,' which would imply more than just Wi-Fi," says Mike Spanbauer of Current Analysis.
Mark Fabbi of Gartner agrees.
"It's pretty clear Cisco bought Meraki because of their ability to manage cloud infrastructure and Meraki has proven that the model works and is robust," Fabbi says. "I would expect that it will become the platform for Cisco to offer different delivery and management models to a much broader product and customer set."
Cisco Senior Vice President Rob Soderbery said Meraki will appeal to midsize companies that have the same IT needs as larger organizations, but without the resources to integrate complex IT systems. Meraki's infrastructure is already used by thousands of customers to manage hundreds of thousands of devices, he said.
Zeus Kerravala sees Meraki playing a key role in Cisco's Cisco ONE programmable networking strategy and its onePK API set.
"It's more cloud management than Wi-Fi," says Zeus Kerravala of ZK Research. "It's software control pushed into the cloud. It's a front-end to onePK on the back-end. Cloud networking is actually the long term value."
Jon Oltsik of Enterprise Strategy Group sees Meraki as a delivery model for some Cisco technologies that currently require on premise hardware.
"I see Meraki as the managed networking part of the cloud strategy," he says. "Think of Cisco technologies like TrustSec, ISE, QoS, WLAN, etc. Cisco makes these things work with its own hardware and software to offer solutions with central policies, reporting, etc. The problem is that not everyone wants to buy or operate this stuff. I can manage network policy in the cloud or on-premise and it's likely that Cisco will integrate the two for a common solution."
Fabbi says that even though Meraki will be anchoring the new Cloud Networking Group, it won't be Cisco's only cloud offering. They already have cloud-based WebEx conferencing, unified communications and IronPort security services.
But Meraki could very well become Cisco's biggest cloud offering, he says.
"They wouldn't have spent over $1 billion for some WLAN bits and pieces," Fabbi says.