This morning, Cisco announced its intention to acquire Whippany, New Jersey-based WHIPTAIL for $415M. For those who don’t know WHIPTAIL, the Cisco press release describes the company as a leader in “high-performance, scalable solid state memory systems."
However, if you look at the WHIPTAIL website, the company describes its products as “The First Family of High Performance Storage.” So, which one is it? Well, both really, as the company offers highly scalable, flash-based storage arrays, and if you look at the specs on these products, they’re fast. How fast? Well, WHIPTAIL can move data faster than the Buffalo Bills can choke away a fourth-quarter lead (I included this just for Duffy). I think Cisco is being careful in its choice of words, but I’ll get to that in a bit.
First, the WHIPTAIL products - the company has three main products to its storage family. The high-end system can scale up to 360TB of storage at 4 million IOPS. The low end of the product line is a product that ranges from 3-12 TB at 250K IOPS, so it has quite the range of from the low to high end. These systems aren’t designed to replace massive enterprise storage systems but rather to be used where speed of storage is critical. Bare metal applications, video transcoding and analytics, such as HANA, come to mind. The continued growth of digital content combined with the Internet of Things will increase demand for big data and analytics, requiring faster-performing data access, which is the value proposition of WHIPTAIL.
Cisco will use WHIPTAIL to bolster its UCS roadmap and fits nicely into the company’s vision of “application-centric infrastructure.” Cisco, through its Cloupia acquisition, also has the management software, UCS Director, to provide a single view into network, compute and storage, strengthening Cisco’s converged data center infrastructure story, particularly for data-intensive applications.
Given the industry trend toward bigger “stacks” and converged infrastructure, as well as the growth in the flash storage market, the acquisition of WHIPTAIL seems like almost a “no-brainer” for Cisco as it looks to bolster its overall data center play. But its move into storage does raise a number of issues that are worth further discussion.
Cisco’s move into storage has been rumored for quite some time. There has been speculation that Cisco would acquire either Network Appliance or EMC, giving it a complete data center play. While that might make sense in theory, it doesn’t make any sense in reality. The traditional storage business is now in decline and is becoming increasingly price-competitive. Given how growth-focused Cisco is, acquiring a traditional storage system doesn’t make any sense. The flash storage market is growing, though, somewhere in the 20%-25% range. So it provides not only a strategic product but also accretive growth. So I don’t believe Cisco will move into legacy storage, and we can expect to see any other acquisition in storage to be in a smaller, higher-growth market.
Another issue is what this acquisition means to Cisco’s storage partners EMC and NetApp. Both are key strategic partners, so does this acquisition mean that Cisco has decided to declare war on a couple of its partners? Is Cisco becoming a vendor that likes to step on its technology partners’ toes? Is John Chambers currently sitting in his office singing Eric Carmen’s “All By Myself”? I’m sure some in the media will position it that way, but in practicality, I don’t think that’s the case. In fact, I think maintaining a healthy relationship is one of the reasons Cisco so carefully avoided using the word “storage” in its press release this morning. Granted, both EMC and NetApp have made their own acquisitions in this market, I do believe there’s enough growth in the market for all the vendors to succeed. Also, Cisco staying out of traditional storage helps maintain the partnership that’s in place. Cisco has been good at managing “co-opetition” in the past, and I don’t see why that would be different now. The partnerships have benefitted all companies involved so it’s in everyone’s best interest to keep them alive. All large vendors compete in some areas, and it takes work to keep the areas of friction from becoming big issues. So far, all parties involved have been willing to put the work in.
Given the trend toward converged infrastructure as a way of delivering on a next-generation data center, choose your favorite descriptor: application centric, software defined, etc. – the acquisition of WHIPTAIL fits very well into Cisco’s "fabric computing" architecture. Cisco still has a significant war chest to use for investments, so I’m sure this isn’t the last data center-oriented acquisition Cisco makes.