Cisco boosts virtual networking with vCider acquisition

Thu Oct 4, 2012 3:12pm EDT

A sign shows the headquarters of Cisco Systems Inc. in San Jose, California May 6, 2008. REUTERS/Robert Galbraith

A sign shows the headquarters of Cisco Systems Inc. in San Jose, California May 6, 2008.

Credit: Reuters/Robert Galbraith

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(Reuters) - Networking equipment company Cisco Systems Inc (CSCO.O) said on Thursday it has acquired virtual networking company vCider to defend itself from competitors in the cloud computing business.

VCider, a privately held company founded in 2010, specializes in offering products that let organizations create virtual private networks and link data centers.

Cisco, which plans to integrate vCider into its cloud computing unit, did not disclose financial terms.

Cisco has been sounding out potential acquisitions in the virtualized networking market for some time but in July lost out to joint-venture partner VMware Iv (VMW.N), which bought technology start-up Nicira for 1.05 billion.

Nicira like vCider is focused on software defined networking (SDN), a technology that some analysts see as a threat to Cisco's core business.

"In our view, Cisco's dominant share in switching puts it most at risk from SDN adoption," ISI Group analyst Brian Marshall said in a research note.

"The acquisition helps Cisco add software/virtualization expertise. We also see it in part as a response to VMware's acquisition of Nicira," Marshall added.

Cisco and VMware's parent company EMC Corp (EMC.N) in 2009 set up a joint venture as a one-stop shop for data centers, bundling Cisco's networking equipment and servers with EMC's storage gear and software from VMware.

(Reporting By Nicola Leske; editing by Andrew Hay)

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