Cisco Continues Acquisition Tear, Picking Up Cloud Security Specialist OpenDNS For $635M

Partners say Cisco Systems is following through with the pledge it made at its Partner Summit in April to focus on software acquisitions, revealing plans Tuesday to buy cloud-based security specialist OpenDNS for $635 million.

OpenDNS, a San Francisco-based provider of advanced threat protection delivered via a Software-as-a-Service model, will build on Cisco's "Security Everywhere" strategy to provide enhanced visibility and threat protection, said Hilton Romanski, senior vice president and head of business development at Cisco, in a blog post Tuesday.

"To build on Cisco’s advanced threat protection capabilities, we plan to continue to innovate a cloud-delivered security platform integrating OpenDNS' key capabilities to accelerate that work," said Romanski. "Over time, we will look to unite our cloud-delivered solutions, enhancing Cisco's advanced threat protection capabilities across the full attack continuum -- before, during and after an attack."

[Related: Cisco Blankets Security Across Entire Network]

The combination of OpenDNS' cloud platform, predictive threat intelligence and broad visibility with Cisco's security capabilities will increase awareness across the extended network, reduce detection time and response to threats, and mitigate risk of a security breach, according to Romanski. OpenDNS' cloud platform already is accessed by more than 65 million users daily.

Partners are hailing the acquisition, saying it makes Cisco a "stronger competitor" in the security market and opens the door for solution providers to become MSPs.

"If you're a partner looking to become a MSP and you're already a Cisco partner, it potentially plugs right into your existing agreements and partner programs allowing you to go into the MSP business," said Robert Keblusek, senior vice president of business development at Downers Grove, Ill.-based Sentinel Technologies, ranked No. 128 on CRN's 2015 Solution Provider 500 list.

Keblusek said OpenDNS will fit alongside Sentinel's and other channel partners' own cloud platform offerings.

"It's a great acquisition for us especially because we're already a security cloud provider. ... If these products are complementary and they go at them with a strong channel model, I think it could be extremely complementary to us and many other partners out there," said Keblusek.

In 2014, fast-rising OpenDNS raised $35 million from investors as it established itself as one of the leading providers of cloud-based security solutions. In March, OpenDNS purchased BGPmon, a provider of network and routing monitoring services.

Ethan Simmons, vice president, East, for ​Dallas-based Lumenate, which partners with OpenDNS and Cisco, said OpenDNS' "already great reputation" in the security space will give Cisco a leg up on the security front. OpenDNS currently has partnerships with Check Point Software Technologies and FireEye.

"Cisco just continues to build out the stack of their security offering, and it's making them a stronger competitor in the marketplace," said Lumenate's Simmons, whose company is ranked No. 145 on CRN's 2015 Solution Provider 500 list. "Cisco is following through with the messaging from Partner Summit, [which is] Cisco is on the software acquisition bandwagon. … Cisco's saying they're going to go after software solutions and obviously the hot topic of today is security, so this is sort of a natural fit that this is a software acquisition around security."

Cisco's focus on software acquisitions was a popular topic at Partner Summit in Montreal in April.

"You'll start seeing Cisco getting bolder and bolder in software, not only in buying companies -- the last nine acquisitions out of 10 are software companies -- but each business unit is innovating more software and coming out with more software solutions that we're going to take to market," said Bruce Klein, senior vice president of Cisco's Worldwide Partner Organization, during a press briefing at the conference.

Less than a week after the conference concluded, Cisco revealed plans to acquire privately held Menlo Park, Calif.-based Tropo, a cloud API platform provider. Earlier this month, Cisco also said it plans to acquire San Francisco-based OpenStack specialist Piston Cloud Computing.

"They've proven they can execute on acquisitions at a reasonably decent rate; as long as they continue that I think it's a good thing for them to do acquisitions," said Sentinel's Keblusek. "OpenDNS is a pretty good fit for them and looks like something they could definitely leverage."

The OpenDNS team is joining Cisco's Security Business Group under the leadership of David Goeckeler, senior vice president and general manager for the Security Group. The acquisition is expected to close in the first quarter of fiscal year 2016.

PUBLISHED JUNE 30, 2015