Cisco's $700M Purchase Of Acano Heralds Tighter Integration With Microsoft, Partners Say

Cisco Systems' acquisition tear continued with the purchase of London-based collaboration startup Acano, which specializes in Microsoft Skype for Business, Lync 2013 and Office 365, for $700 million.

Cisco partners say tighter integration with Microsoft on the collaboration front is a smart strategy.

"Acano has some unique technologies. Specifically, they're ahead on the Microsoft Lync, Skype for Business aspect; that's one of the key things here with this acquisition," said Chris Bottger, senior vice president of collaboration services at IVCi, a Hauppauge, N.Y.-based solution provider and partner of both Cisco and Acano. "What this acquisition of Acano, which has a strong Microsoft integration, is doing is diverting away from three years ago when they wanted to beat Microsoft," he said.

According to Bottger, who sits on Cisco’s Collaboration Advisory Board, when Rowan Trollope, senior vice president and general manager of Cisco's Technology Collaboration Group, was appointed three years ago he realized Cisco's strategy of trying to beat Microsoft on the collaboration and unified communications front wasn't going to work.

[Related: CEO Robbins Has Cisco On The Fast Track, And Partners Are Ready, Set, Go]

"And that's clearly what you're seeing now. It's not about replacing them, it's about interoperating with the likes of Microsoft to create a much better ecosystem that Cisco then can drive as well," said Bottger, whose company is ranked No. 226 on the 2015 CRN Solution Provider 500. "A lot of people have [Microsoft] Office and if you look at the Office 365 numbers, that keeps on going up. So it's a very smart strategy that rather than going against it -- you're going to compete against it, yes -- but also make sure you can work with it. … That's what they're protecting themselves against by doing these acquisitions."

Cisco and Microsoft signed a three-year agreement in 2014 to drive deeper integration across their data center portfolios and jointly market their technology. Earlier this year, the two companies introduced Cisco Cloud Architecture for the Microsoft Cloud Platform, which integrates Cisco's ACI with Microsoft's Windows Azure Pack to help cloud providers more quickly deliver hybrid cloud services while simplifying operations and cutting costs.

Privately held Acano was founded in 2012 by former Cisco executives, including O.J. Winge, who was senior vice president and general manager of Cisco's Collaboration Technology Group and is now Acano’s CEO. Winge and some other Acano executives, including CTO Mark Blake, had joined Cisco through its acquisition of videoconferencing specialist Tandberg in 2009.

Acano provides hardware and software including gateways and video and audio bridging technology that allows customers to connect video systems from multiple vendors across both cloud and hybrid environments, according to Cisco, San Jose, Calif.

"Acano will help Cisco expand the interoperability and scalability of our collaboration portfolio -- allowing customers to connect from anywhere, from a browser on a mobile device to the corporate boardroom, and now scaling to easily connect thousands of users across an organization," said Rob Salvagno, vice president of Cisco's Corporate Business Development, in a blog post Friday.

"It's positive to see that former Cisco folks went off and created some innovation and then Cisco had the admiring eye to bring it back into the family," said Kent MacDonald, vice president of converged infrastructure and network services at Long View Systems, a Calgary, Alberta-based solution provider and Cisco Gold partner.

Partners say the acquisition of Acano is part of Cisco's revamped collaboration push, which began a few years ago.

"Collaboration [hit] a bit of a lull going back a few years ago, but we're certainly starting to rebound nicely now, more in the U.S. than it has been in Canada," said MacDonald. "With the partnership with Apple around collaboration and this announcement, it shows Cisco continues to not rest on their laurels and continues to invest to distance themselves from the competition."

Cisco's Salvagno said in the blog post that the company's vision is to "dramatically increase" the number of video-enabled conference rooms and enable customers to connect more easily to rooms from any device. He pointed to Cisco's achievements in the collaboration business over the past two years, including Cisco Spark, its Apple partnership and simplifying its offerings from 65 endpoints down to 17.

During Cisco's first-quarter fiscal year 2016 earnings report this month, the networking giant reported product collaboration revenue of $1.1 billion, an increase of 17 percent year over year.

"I see collaboration as a big opportunity in addition with our hybrid cloud services," said MacDonald. "[Cisco CEO] Chuck [Robbins] is taking Cisco into a new gear."

In Robbins’ first 100 days at the helm, Cisco inked deals for Internet of Things and data analytics company ParStream; security consulting firm Portcullis Computer Security; threat analysis and protection specialist Lancope; and cloud-based video provider 1 Mainstream.

In addition to the Apple partnership, Robbins formed new alliances with mobile communications behemoth Ericsson, electricity distributor and global energy management company Schneider Electric, and robotics specialist Fanuc America, among others.

"Everything that is being done here is exactly what Chuck said he would do and what [former CEO John] Chambers said he needed from Chuck. Because [Chambers] said, 'Chuck will execute quicker than what I can.' And it's true. They're not going to mess around and wait if they can't get what they need," said IVCi's Bottger.

Acano, which was named to CRN’s 2015 Emerging Vendors list, has approximately 100 channel partners, and its ideal partner is enterprise-focused, according to the CRN list.

Under the agreement, Cisco will pay $700 million in cash and assumed equity awards, plus additional retention-based incentives for Acano employees who join Cisco. The acquisition is expected to close in the third quarter of Cisco's fiscal year 2016.

PUBLISHED NOV. 20, 2015