Cisco, one of the most acquisitive technology companies in Silicon Valley, agreed on Tuesday to pay $415 million in cash for Whiptail, which makes software to manage flash storage in the cloud.
For Cisco, best known as a networking company, the deal for Whiptail is among its first moves into the storage space. But the deal may also increase the tensions between Cisco and an important partner, EMC, the large storage company based in Massachusetts.
Last year, VMware, which is majority owned by EMC, paid $1.26 billion for Nicira, a next-generation networking company. That deal pit EMC and Cisco against each other. The deal not only reduced EMC’s need for Cisco’s products, but it put the two companies in direct competition for selling networking gear to their customers.
EMC’s chief executive, Joe Tucci, speaking at the Techonomy Conference in Tucson, Ariz., last November, acknowledged that VMware’s deal for Nicira had created some tensions.
“Cisco is our closest and most strategic partner, and we’ll have a long, prosperous relationship,†Mr. Tucci said. But buying Nicira put “a little stress on the relationship,†he said.
By purchasing Whiptail, Cisco has effectively hit back. Whiptail makes software that allows corporate clients to easily manage large arrays of flash storage in the cloud, an area EMC has traditionally excelled at. What’s more, EMC bought a key Whiptail competitor, XtremIO, last year .
As large enterprise technology companies rush to provide eve rmore services to their clients, tensions between longtime partners are likely to become more common.
“We are focused on providing a converged infrastructure including compute, network and high-performance solid state that will help address our customers’ requirements for next-generation computing environments,†Paul Perez, general manager of Cisco’s computing systems product group, said in a statement.
Evercore advised Whiptail.
