Image source: gatesnotes.com

Many industry experts were expecting the SD-WAN market to start consolidating in 2017. The predictions turned out to be true with a big surprise yesterday when Viptela announced that they are being acquired by Cisco. Cisco is paying $610M in cash to buy Viptela. The Cisco official press release can be found here.

Viptela is a very successful SD-WAN company and it is publicly known that I have architected a huge SD-WAN network using Viptela’s technology. Many of my enterprise peers and SD-WAN enthusiasts pinged me to understand my view on this acquisition. Below I outline why I feel this acquisition is a positive news for the SD-WAN industry and the enterprise market at large:

Cisco iWAN didn’t work as expected and Cisco fixed the problem with the acquisition
I have heard from many enterprise architects that Cisco iWAN didn’t work as expected. More and more enterprises were evaluating and deploying products from SD-WAN startups, including Viptela, due to limitations in Cisco iWAN. It feels that leadership within Cisco has acknowledged the fact that they are losing customers to this next wave of innovation, and they fixed the problem by acquiring one of the best technologies out there in the industry.

Viptela has the right architecture needed for large scale SD-WAN deployments. Viptela’s routing stack, segmentation, Zero Touch Provisioning (ZTP), centralized policies, centralized templates and many other features lead the industry, despite multiple competitors. Viptela has also added a lot of Cloud capabilities in their product making it easy for enterprises to consume IaaS and PaaS offerings. Cisco will surely benefit from many of these features that were lacking in current Cisco offerings.

Did Cisco acquire Viptela to kill it?
I don’t think so and neither do many other industry experts like Ethan Banks and Greg Ferro from PacketPushers. It is very clear that Cisco is transitioning to a software focused companies based on recent acquisitions and product releases. Cisco has been running Meraki independently since acquisition. Cisco gains a lot more benefit by building on Viptela rather than killing it. There are more startups in the SD-WAN space who have good product offerings, it is a crowded space. Cisco still needs to compete with other startups and they need a killer product to compete and win.

What Cisco needs to get right going forward?
First and foremost, Cisco should let Viptela continue to drive the innovation in their products and roadmap. Acquisitions can be positive but re-orgs and politics can be demotivating. Cisco should try and make sure not to slow down the momentum of the Viptela teams. Viptela’s innovation should not stop.

Second, Cisco SD-WAN (not referring it to as iWAN anymore) leadership should start talking to customer thought leaders and network architects from enterprises who are existing or future customers of Viptela. Viptela experienced a lot of success because they addressed the pain points of deploying largescale WAN. Viptela’s teams has done an excellent job of collecting customer requirements regularly and delivering against those requirements. Cisco SD-WAN leadership should talk to existing customers before making any major architectural changes in the Viptela products.  Viptela created many features at the requests of many enterprise customers and those features have a great value. Hopefully Cisco’s SD-WAN team will continue collaborating so that the enterprise architects feedback is listened to and leveraged.

Third, Cisco will most likely start using Viptela software on the ISR 4k routers and make Viptela a part of their SD-WAN (not iWAN) offering. However, Cisco should continue offering Viptela vEdge routers to customers as well because those small sized routers have their own advantages and cost benefits. Not everyone needs big boxes with hundreds of compatible modules. Having various types of hardware models along with Viptela software will provide the right choice for the industry.

The Unknowns
There are many unknowns that many of can’t answer yet. For example, what happens to Meraki SD-WAN offering? Meraki SD-WAN has been deployed in a few SMB enterprises so it will be interesting to watch what happens to the Meraki SD-WAN. It will also be interesting to see what happens to Cisco’s investment in VeloCloud.

Concluding remarks
In a few months, we will start getting all the details on how Cisco plans to use Viptela technology. I feel that the Viptela acquisition will propel more acquisitions in near future. This is because the VCs of the remaining SD-WAN vendors might start looking for an exit strategy to get good returns on their investments. Overall, I feel enterprises will get more benefits due to acquisitions and consolidation. Only time will tell.

May the best technology win.

Acknowledgements: Thanks to my mentors for sharing their insight and reviewing my blogs.
References:
   1. PacketPushers podcasts.
   2. SDxCentral and SDxTech blogs.
   3. gatesnotes.com for the image.