Cisco Buys Whiptail; Will Storage Deal Pressure EMC, NetApp Partnerships?

Networking giant Cisco Systems (CSCO) is buying flash storage specialist Whiptail for $415 million. What does this mean for Cisco’s EMC and NetApp (NTAP) relationships? Let’s start by reminding readers that vendors often compete and cooperate (“coopetition”). Here’s the analysis.

Cisco, which is a Whiptail investor, said it will incorporate the company’s solid state drive (SSD) storage technology into its Unified Computing System (UCS) strategy to improve application performance. Cisco said bringing SSD systems closer to the application will close the gap between the application performance demands from servers and what traditional storage systems can deliver.

The data storage move puts Cisco squarely in collaborator EMC’s (EMC) territory and could stress its relationship with the storage giant, which it relies on for enterprise storage solutions. In May 2012, EMC paid $430 million for flash storage maker XtremeIO, an Israeli startup, and primary Whiptail competitor, and followed it up in July of this year by grabbing ScaleIO for some $300 million.

Cisco also has a growing relationship with NetApp, which we’ll continue to watch closely.

Bigger Picture

Cisco joins a group of top IT companies sorting out their flash memory storage strategies. For example, Western Digital (WDC) on Monday bought Virident for some $645 million, following earlier moves by IBM (IBM) to buy Texas Memory Systems in August, 2012 and Dell’s investment this year in Skyera.

Under terms of the Cisco deal, Whiptail’s 80 employees will be folded into Cisco’s Computing Systems Product Group headed by Paul Perez, Cisco vice president and the unit’s general manager.

“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,” said Perez.

Whiptail’s technology will enable Cisco to improve the UCS architecture by integrating data acceleration capabilities into the compute layer, simplifying customers’ data center environments by supplying better performance with more efficient use of physical space—in other words, doing more with less, Cisco said.

“As we continue to innovate our unified platform, Whiptail will help realize our vision of scalable persistent memory which is integrated into the server, available as a fabric resource and managed as a globally shared pool,” said Perez.

Cisco said it expects the transaction will close in the first quarter of 2014.