Cisco Acquires Cloupia – Becoming a Management Software Vendor?

On November 15th, Cisco announced that it was acquiring Cloupia a cloud management startup that had built a unique combination of physical provisioning for converged infrastructures like the Cisco UCS and its downstream partner bundles like vBlocks and NetApp Flexpods with the ability to automate the provisioning of IaaS clouds on these converged infrastructures. Cisco had previously acquired Tidal Software, a vendor specializing in monitoring SAP in production, and newScale, a vendor who arguably lead the market for enterprise grade service catalogs.

Cisco a Management Software Vendor?

It is no secret that VMware intends to disrupt the management software business by focusing its vCloud Suite upon virtualized and cloud based platforms to the detriment of incumbent management software vendors like IBM, HP, CA and BMC. It is also no secret that by acquiring Nicira, VMware is positioning itself to potentially disrupt the networking business by moving the value of configuring and managing the network out of the switch hardware and into its Software Defined Data Center offering, vSphere.

Finally it is fairly well known that Cisco is not going let the revenue and the value that comes with configuring and managing the network flow to another vendor without a fight. One of Cisco’s responses on the Software Defined Networking front is outlined in this GigaOm post about the investment in Insieme, a “spin-in” which Cisco also has the right to acquire in full.

If Cisco embraces Software Defined Networking, then at the end of the day that means that Cisco will have to embrace commodity switching hardware and get its profit margins from separately sold software. That will subject Cisco to competition on two fronts, one with commodity switch hardware vendors (the largest of which oddly enough is HP), and other with software vendors like VMware who view SDN as a part of their SDDC strategy. While it is difficult to forecast the economic consequences of this to Cisco, it is reasonable to assume that the market always wants to commoditize hardware over time, that Cisco has gotten away with non-commodity pricing for its hardware for a long time, and that the end of that road may be approaching.

If this means that Cisco’s core networking business is going to come under pressure due to disruptive influences from VMware and other vendors of SDN’s and SDDC’s, then it would be wise for Cisco to see adjacent businesses to move into and perhaps disrupt. There is no business in the software industry that needs to be disrupted as badly as the enterprise management software business. Vendors in this business have not modernized their products for virtualized data center and the cloud, they have not modernized their business and selling models for this new world, and customers view the incumbent solutions as some of the most hated software that they own.

One has to wonder what Cisco is going to do next. Perhaps it will set its sights on the $18B Operations Management market (as measured by Gartner in this report). Buying Cloupia put Cisco in direct competition with VMware vCloud Automation Center. Entering the Operations Management market would put Cisco in direct competition with another of VMware’s most strategic initiatives – vCenter Operations Manager.

Summary

Through a variety of initiatives including the Insime spin-in and the acquisition of Cloupia, Cisco is signalling that it is heading in the direction of becoming a management software vendor for virtualization and the cloud. This amounts a sharpening of the competitive knives with respect to VMware, and may position Cisco to become a factor in the disruption of the legacy management software businesses of IBM, BMC, HP and CA.

Bernd Harzog (318 Posts)

Bernd Harzog is the Analyst at The Virtualization Practice for Performance and Capacity Management and IT as a Service (Private Cloud). Bernd is also the CEO and founder of APM Experts a company that provides strategic marketing services to vendors in the virtualization performance management, and application performance management markets. Prior to these two companies, Bernd was the CEO of RTO Software, the VP Products at Netuitive, a General Manager at Xcellenet, and Research Director for Systems Software at Gartner Group. Bernd has an MBA in Marketing from the University of Chicago.

Connect with Bernd Harzog:

Tags: , , ,

One Response to Cisco Acquires Cloupia – Becoming a Management Software Vendor?

  1. December 3, 2012 at 7:57 AM

    By recent steps by Cisco Ltd. it shows they are going to acquired all of its competitors in this industry.

Leave a Reply

Your email address will not be published. Required fields are marked *

Please Share

Featured Solutions