& cplSiteName &

Cisco to Buy Hot Startup Tail-f for $175M

Ray Le Maistre
6/17/2014
50%
50%

In what could signal a significant shift for the IP networking giant, Cisco Systems has struck a deal to acquire Swedish network management specialist Tail-f Systems for $175 million in cash and retention-based incentives.

Tail-f is not a massive company -- it has just 75 staff and its revenues are estimated to be below the $30 million mark -- but it has an unrivaled reputation in its particular area of excellence: managing and orchestrating multi-vendor networks with software tools based on the Netconf and Yang standards, capabilities that have attracted a great deal of attention from network operators considering their SDN and NFV strategies. (See Netconf & Yang Go Mainstream.)

Those network operators include two of the world's leading and most influential Tier 1 operators, AT&T Inc. (NYSE: T) and Deutsche Telekom AG (NYSE: DT). (See Deutsche Telekom: A Software-Defined Operator, Deutsche Telekom Selects Tail-F, and AT&T's Cloud Future Takes Shape.)

But one of Tail-f's strengths and attractions is that it has been an independent company that supports open architectures -- being acquired by Cisco Systems Inc. (Nasdaq: CSCO) is going to raise questions about whether its valuable network management capabilities will be swallowed by the IP giant and its pioneering work will come to a halt, even though Cisco has been talking about its support for Netconf and Yang this year.

In an exclusive interview with Light Reading, Tail-f CEO Fredrik Lundberg said Cisco is keen to continue all the relationships (operator and vendor) that the Swedish startup has brokered, and has committed to the standards-based vision of open network architectures that Tail-f has long preached. "We have made a difference in the industry and that will only increase as part of Cisco. They get it and are committing to the multi-vendor and open architecture vision -- this is a real chance for Cisco to get into software orchestration, and we will be a strategic asset in an important change journey at Cisco."

Lundberg added: "We are obviously very excited. We believe this will be good for us and for the industry. We are now past some milestones with Netconf and Yang, and now we will be turbocharged. We have worked so long to get the industry excited about Netconf and Yang and now we have reached a critical point -- service providers are requesting it and the industry has realized it is important. We feel optimistic about continuing our journey, and Cisco will give us a great channel and the chance to address new parts of the market," said the CEO, who added that Tail-f is now deployed at around 15 customers, most of which have not yet been identified.

And while Tail-f has long been associated with the network management challenges associated with the introduction of SDN capabilities into large networks, Lundberg notes that once companies look into the capabilities of Netconf and Yang they understand that there are very real opportunities to simplify network management and operations right now in existing networks. "Where we see significant interest right now is in service orchestration in multi-vendor networks delivering layer 2 and layer 3 VPNs," notes the CEO.

Real opportunity for Cisco
Tail-f will become part of Cisco's Cloud Virtualization Group headed up by Gee Rittenhouse, and while Lundberg says the whole team is moving across to its new parent, he's not sure the company name will survive.

Heavy Reading Senior Analyst Caroline Chappell says if Tail-f is going to become part of Cisco, then the Cloud Virtualization Group is the best place for it to be. "That part of Cisco needs to support multi-vendor capabilities, so that's a good sign, but there will be elements within Cisco that will fight against that. It'll be interesting to see what sort of company Cisco can be -- this is a real opportunity for it to show that it can be an open company."

Chappell compares Cisco's opportunity to that of IBM in the late 1980s, when the mainframe giant transformed itself into a software-and-services company and came out a better, stronger company.

"That could happen to Cisco," she says. But Chappell warns that people will be "deeply suspicious of what Cisco's intentions will be. Is it buying Tail-f for its own use or will it embrace open architectures?"

If Cisco funds Tail-f and preserves its autonomy, "it could do great things for Cisco and its reputation," she notes. "Tail-f has attracted a lot of attention and interest, and is the only multivendor service orchestration vendor on the market with a transactional capability based on Netconf and Yang. It is unique and a powerful tool. Cisco can also take this to the enterprise market too. This is a real chance for Cisco and I really hope they don't blow it."

Lundberg recognizes that there will be skepticism about Cisco's motives. "It might be hard to persuade everyone. We recognize that and so does Cisco, so it will take time. But our ConfD product [multi-protocol device configuration] will still be available to the market," says the CEO.

Quite what Cisco will do with Tail-f will be a hot topic of discussion today at Light Reading's Big Telecom Event (BTE) in Chicago. (Check out all the news from the event at our dedicated BTE News Site.)

Hot property
With its Tier 1 operator support, Tail-f has been attracting the attention of multiple large companies that also wanted to buy the company, according to the industry rumor mill.

So was there a bidding war? Lundberg refused to comment at all on whether Tail-f had been approached by other suitors, but Heavy Reading's Chappell believes that Cisco won the day in a competitive bid.

The returns look decent for Tail-f's investors, though Lundberg wouldn't talk about how much Tail-f had raised from its backers. He did, though, note that the most recent round of funding was in May 2013. Prior to that the company appears to have raised only about $6 million, with SEB Venture Capital the lead investor.

— Ray Le Maistre, Circle me on Google+ Follow me on TwitterVisit my LinkedIn profile, Editor-in-Chief, Light Reading

(8)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
rubyliu
50%
50%
rubyliu,
User Rank: Light Beer
6/18/2014 | 5:58:40 AM
Re: Software Technology
Tail-f employees will join Cisco's Cloud and Virtualization Group led by Gee Rittenhouse, vice president and general manager, according to Cisco.

Lau Marrine
w_mc10
50%
50%
w_mc10,
User Rank: Light Beer
6/17/2014 | 4:37:56 PM
Software Technology
It is interesting that Tail-f's software is largley written in Erlang, the same programming language used by Whatsapp. See the WSJ article:

http://blogs.wsj.com/cio/2014/02/24/facebook-whatsapp-messaging-service-written-in-exotic-erlang/

Erlang was developed by Ericsson 20-ish years ago, several of the key people behind this technology left Ericsson and now work for Tail-f.
dwx
50%
50%
dwx,
User Rank: Light Sabre
6/17/2014 | 2:38:05 PM
Re: Interesting move for Cisco
Many of the recent IETF drafts covering new YANG models for various functions like ACLs, Service Chaining, OAM, etc. came from Cisco before this purchase.  I don't think the future of YANG is really in jeopardy at this point now that the large vendors are behind it.   

I'm not sure what Cisco will do with Tail-F's components.  NCS may be integrated into their current Prime suite of applications, which IMHO would be terrible because they aren't very good.   I think they are going to have to remain vendor-agnostic however or risk losing Tail-F's larger customers.   Much of what Tail-F was doing is custom developing solutions for providers, and Cisco can at least put resources behind that.   Much like Granite, Remedy, or even something like Peoplesoft, the underlying engine is the same but they are all usually highly customized for their clients.  

I also agree the future of the ConfD product seems a little hazy.  ConfD is kind of a middleware for configuration and they offer middleware components in other areas like video.  I could easily see the product being killed off also.  
philgr99
50%
50%
philgr99,
User Rank: Lightning
6/17/2014 | 2:12:03 PM
Interesting move for Cisco
While NCS is the jewel Cisco will want out of this acquisition it will be interesting to see how they maintain the ConfD business that has helped NetConf and Yang become a reality and, I assume, still make up the vast majority of Tail-f's customer base. I can't imagine the equipment vendors using ConfD will be comfortable with the new owners.

For Cisco, a software product like ConfD is a new beast and will require very different business practices to remain successful. Cisco has made steps in supporting multivendor networks with Cariden and other products but this takes it to another level. It will be interesting to see if the rest of the market players are ready for it or if it stalls the adoption of NetConf and Yang.

 

 

 
billcowardxx
50%
50%
billcowardxx,
User Rank: Light Beer
6/17/2014 | 11:04:46 AM
Innovation via aquistion
Innovation via aquistion,

We've been working with Tail-f for 6 months now in our NetArch lab and I'm curiuos to learn how this will effect our invested time and efforts. I think if Cisco integrates the Cariden suite of products with the multivendor tail-f capabilities would be a valuable orchestration solution to many MSOs. 
Phil_Britt
50%
50%
Phil_Britt,
User Rank: Light Sabre
6/17/2014 | 10:56:27 AM
Only time will tell
Cisco has had a recent history of not getting full value out of its purchases, and not being very successful (based on stock price movement) in entering new markets. Only time will tell if this transaction breaks the mold or is more of the same.
DOShea
50%
50%
DOShea,
User Rank: Blogger
6/17/2014 | 10:52:36 AM
Cloud roster
I guess this is one way for Cisco to get onto AT&T's cloud roster. I believe there were come analyst observations that Cisco could be the biggest loser as AT&T pulled together this project.
DanJones
50%
50%
DanJones,
User Rank: Blogger
6/17/2014 | 10:34:23 AM
CoNfD
CoNfD cuts across many sectors. BLiNQ uses it for network management for its self-organizing mobile backhaul system.
From The Founder
Either we perform a complete 'factory reset' on the way the telecom industry creates and deploys virtualization, or we face the consequences.
Flash Poll
Live Streaming Video
Charting the CSP's Future
Six different communications service providers join to debate their visions of the future CSP, following a landmark presentation from AT&T on its massive virtualization efforts and a look back on where the telecom industry has been and where it's going from two industry veterans.
LRTV Custom TV
The Urgency of Commercial 5G Services

4|26|17   |     |   (0) comments


The progress of 5G has been closely monitored in the industry. At the 2017 Brooklyn 5G Summit, the sense of urgency for a commercial 5G launch had started to surface among operators.
Women in Comms Introduction Videos
How Diversity Helps Comcast Mirror Its Customer Base

4|26|17   |   2:55   |   (0) comments


Diversity brings innovation, creative ideas and a way to reflect the broad spectrum of your customer base, Comcast Director of Customer Experience Jenelle Champlin says.
LRTV Huawei Video Resource Center
Mobile Operators & Video

4|25|17   |     |   (0) comments


Ovum's Ed Barton discusses the latest mobile operator strategies for mobile video.
LRTV Custom TV
Infinera Introduces Instant Network

4|20|17   |     |   (1) comment


Mike Capuano, vice president of marketing at Infinera, discusses the advancement from Instant Bandwidth to new Instant Network capabilities, which include Bandwidth License Pools, Moveable Licenses and Automated Capacity Engineering (ACE).
Women in Comms Introduction Videos
Vodafone's Eubank on Sponsors, Mentors & Moving On Up

4|19|17   |   4:25   |   (0) comments


Vodafone America's Head of Operations Kimberly Eubank breaks down the difference between a sponsor and a mentor and shares why both made a big difference in her career.
LRTV Custom TV
NYC Auto Show: Are We Smart Yet?

4|18|17   |     |   (0) comments


The auto industry is facing some big transformations as electric vehicles, autonomous technology and connected cars are seen as the future of the industry. During the much-anticipated NY international auto show, there was an emergence of new technology and mobility service on the show floor. Aside from performance, brands like Lincoln, Hyundai, Honda, Mercedes and ...
LRTV Huawei Video Resource Center
The Impact of Video

4|18|17   |     |   (0) comments


David Mercer from Strategy Analytics discusses the impact of video on current strategies.
LRTV Custom TV
Pardeep Kohli Discusses Network Transformation & the Market Opportunity for the 'New' Mavenir Systems

4|13|17   |     |   (0) comments


In a brief discussion at MWC 2017, Heavy Reading analyst Adi Kishore talks to Pardeep Kohli, CEO, Mavenir Systems about the creation of the 'new Mavenir' and some of the key challenges facing operators in today's market. A key theme of the discussion centers around operator need for software-only, virtualized solutions and how they will need to adapt to ...
Women in Comms Introduction Videos
Tech Maverick Shares Her Tips for Gender Inclusivity

4|12|17   |   7:28   |   (0) comments


Wendy Hall Bohling, a corporate escapee, author and gender exclusivity consultant, tells her story of sexism, bias and progress along the road to gender equality in the workforce.
LRTV Huawei Video Resource Center
Huawei at MWC 2017

4|11|17   |     |   (0) comments


At Mobile World Congress 2017, the biggest mobile industry gathering of the year, Huawei showcased its new innovations and solutions with the theme "Open Road," which focuses on cloud, 5G, operation transformation, videos and consumer-oriented products. Its campaign has been recognized by three awards given by GSMA.
LRTV Custom TV
China Telecom NFV Infrastructure on RSD

4|6|17   |     |   (0) comments


Lynn Comp, senior director of market development of Intel, is joined by Chong Zhang, storage engineer at Inspur and Ou Li Yan, architect for technology strategies of China Telecom, for a discussion of what NFV brings.
LRTV Custom TV
Nokia's IMPACT Software Demo

4|6|17   |     |   (0) comments


Khamis Abulgubein of IoT market development at Nokia demonstrates IMPACT (intelligent management platform for all connected things), a software solution with a horizontal approach to managing any device on any application.
Upcoming Live Events
May 15-17, 2017, Austin Convention Center, Austin, TX
May 15, 2017, Brazos Hall - Austin, TX
May 15, 2017, Austin Convention Center - Austin, TX
June 6, 2017, The Joule Hotel, Dallas, TX
All Upcoming Live Events
Infographics
With the mobile ecosystem becoming increasingly vulnerable to security threats, AdaptiveMobile has laid out some of the key considerations for the wireless community.
Hot Topics
Surprise! AT&T Markets 4G Advances as '5G Evolution'
Dan Jones, Mobile Editor, 4/25/2017
Did Verizon Outbid AT&T for Straight Path?
Dan Jones, Mobile Editor, 4/25/2017
First Year TIPs the Scale Toward Success
Denise Culver, 4/24/2017
Verizon: Small Biz in Cybercrooks' Crosshairs
Carol Wilson, Editor-at-large, 4/27/2017
Like Us on Facebook
Twitter Feed
BETWEEN THE CEOs - Executive Interviews
One of the nice bits of my job (other than the teeny tiny salary, obviously) is that I get to pick and choose who I interview for this slot on the Light Reading home ...
TEOCO Founder and CEO Atul Jain talks to Light Reading Founder and CEO Steve Saunders about the challenges around cost control and service monetization in the mobile and IoT sectors.
Live Digital Audio

Playing it safe can only get you so far. Sometimes the biggest bets have the biggest payouts, and that is true in your career as well. For this radio show, Caroline Chan, general manager of the 5G Infrastructure Division of the Network Platform Group at Intel, will share her own personal story of how she successfully took big bets to build a successful career, as well as offer advice on how you can do the same. We’ll cover everything from how to overcome fear and manage risk, how to be prepared for where technology is going in the future and how to structure your career in a way to ensure you keep progressing. Chan, a seasoned telecom veteran and effective risk taker herself, will also leave plenty of time to answer all your questions live on the air.