Cisco's Buying Spree Just Started with WhipTail

A few months ago Cisco announced that it acquired WhipTail, a flash array manufacturer. The announcement sent shockwaves across the flash industry, and it sent Cisco storage partners NetApp and EMC scrambling to explain the acquisition to their partners and customers. I read so many explanations and so many analyses trying to come to grips with it myself.

I have predicted for a long time now that Cisco would get into the storage business and that EMC will acquire a networking company. Cisco's acquisition of WhipTail looks to be just the start of other acquisitions to follow in the storage space. We'll get into that later, but first, let's look at the WhipTail buy.

To hear it from industry analysts, especially those who cover storage, Cisco simply acquired Whiptail to provide server-side cache for its UCS blade servers. Cisco says it doesn't intend to get into the storage business and compete--the company values its storage partners. I'd agree with the first part, but on the second part, I doubt Cisco can't help but get into the storage business with an acquisition that's worth half a billion dollars. The idea that WhipTail will offer server-side cache for UCS blades is a great idea and I'm sure Cisco is already on that integration even before the acquisition closes. But imagining that Cisco will sit out the flash-based array wave defies logical.

And so it brings up a question: Why would Cisco contain itself to that one goal? WhipTail is right up there with Fusion-io, Violin Memory and others. It's definitely top five in its category. So, why would Cisco buy them and go on to dilute their expertise just so you can use server-side flash for UCS?

The other big reason Cisco gives for limiting WhipTail's use to server-side cache is that it doesn't want to threaten its relationship with EMC and NetApp. And the answer to that is, what can NetApp or EMC do, threaten to switch server manufacturers in the converged stacks? Let's entertain than point for a minute. What would they replace Cisco with? HP? IBM? Dell? They all have storage and converged stacks, it would be no different to them than Cisco. They can go to Lenovo, Fujitsu, HDS and other vendors, but then they'd lose the mind share of the industry and they'd lose the attraction to these converged stacks, which in large part, is because of the UCS architecture. Bottom line: EMC and NetApp are stuck and can't do anything except smile and keep moving forward. Cisco executed beautifully and masterfully.

WhipTail is just a start and I believe Cisco will acquire more companies in the storage space. I believe that Cisco will acquire NetApp at some point. Flexpod is a huge success, and Cisco looks to be trying to replicate what IBM is doing, so the eventual Cisco/NetApp deal makes complete sense.

How will EMC respond? Whatever it does, it won't be as effective as what Cisco has already done. But EMC could potentially acquire Arista Networks, an established cloud networking provider that is heavy into software-defined networking. Its SDN craving would complement what VMware is doing with SDN and provide the hardware end of that story. It would also allow for EMC to have a share of the networking market. EMC could also then leverage Lenovo for the server or continue to rely on Cisco. No matter how I am looking at it, Cisco still comes out ahead.

What do you all think? Does this make sense? I'm eager to hear your feedback.

Posted by Elias Khnaser on 11/04/2013 at 3:09 PM