Cisco Buying AppDynamics for $3.7B

Privately held AppDynamics, which provides cloud application and business performance optimization technology, was due to go public this week.

Mitch Wagner, Executive Editor, Light Reading

January 25, 2017

3 Min Read
Cisco Buying AppDynamics for $3.7B

Cisco is snapping up AppDynamics, a provider of cloud monitoring technology for improving application and business performance, for $3.7 billion, just as AppDynamics was planning to have an IPO this week.

The combination will allow Cisco to "provide end to end visibility and intelligence from the network through to the application" to help customers improve business results, Rowan Trollope, Cisco Systems Inc. (Nasdaq: CSCO) senior vice president and general manager of the Internet of Things and Applications Business Group, said in a statement.

Combining monitoring of the network, security and application layers can help companies get insight into the quality of customer experience, Rob Salvagno, head of Cisco's M&A and venture investment team, said in a post on the Cisco company blog.

AppDynamics CEO David Wadhwani will continue to lead the company as a software business unit in Cisco's IoT and Applications business, reporting to Trollope.

AppDynamics filed for its IPO in December, targeting a $100 million offering. At the time, it said its revenue for fiscal 2016, which ended January 31, was $150.6 million, up 84% from $81.9 million in 2015, which was in turn up 247% from $23.6 million in 2014.

And that growth was continuing; revenue for the nine months ending October 31 2016 was $158.4 million.

AppDynamics said it had 1,975 customers in October, including more than 275 of the Global 2000, located in more than 50 countries across every major industry.

The company incorporated in 2008 under the name Singularity Technologies.

Cloud acquisitions are already hot in the new year. The Cisco-AppDynamics acquisition comes on the heels of Hewlett Packard Enterprise buying Cloud Cruiser, which offers analytics and software to measure, and bill for, services used by customers. (See HPE Expands Cloud Offerings With Cloud Cruiser Acquisition.)

Last week, Hewlett Packard Enterprise bought SimpliVity, a pioneer in hyperconverged cloud servers, for $650 million, opening the door to speculation that SimpliVity competitor Nutanix might also get snapped up. (See HPE Buys SimpliVity for $650M in Hyperconverged Cloud Play.)

And last month, VMware bought the technology and IP from PLUMgrid, a provider of software-defined networking for cloud computing. (See VMware Buys SDN Startup PLUMGrid's Assets .

Competitors to AppDynamics include HPE and Microsoft, as well as specialized application performance management companies such as Dynatrace and New Relic.

Riverbed Technology Inc. (Nasdaq: RVBD), another application performance management company, bought Aternity to monitor end-user devices, in August. (See Riverbed Buying Aternity for Endpoint Management.)

Cisco is gaining cloud infrastructure market share, and Dell and HPE are losing ground, but Dell and HPE are still the market leaders in cloud infrastructure, according to a recent report from analyst firm International Data Corp. (See Cisco Gains, Dell & HPE Lose on Cloud Infrastructure - Analyst.)

Cisco is investing heavily in the cloud as part of a long migration beyond its traditional networking hardware business. Notably, mere hours before announcing the AppDynamics acquisition, Cisco announced new Spark Board conference room video conferencing hardware and a complementary Spark cloud collaboration service designed to combine high performance with low prices. (See Cisco Looks to Take the Pain out of Meetings.)

Want to know more about the cloud? Visit Light Reading Enterprise Cloud.

Cisco launched a data center analytics platform, Tetration, in June. (See Cisco Launches Data Center Analytics for Obsessives.)

And it acquired Jasper Technologies for cloud IoT for $1.4 billion in February. (See Cisco Looks to Jasper Acquisition to Transform Enterprises – & Itself.)

As part of Cisco's shift to recurring, software-based revenue models and the cloud, Cisco said in August it would lay off 5,500 employees, which is 7% of its workforce. (See Cisco Throws 5,500 Overboard on Cruise to Richer Waters.)

— Mitch Wagner, Follow me on TwitterVisit my LinkedIn profile, Editor, Light Reading Enterprise Cloud

About the Author(s)

Mitch Wagner

Executive Editor, Light Reading

San Diego-based Mitch Wagner is many things. As well as being "our guy" on the West Coast (of the US, not Scotland, or anywhere else with indifferent meteorological conditions), he's a husband (to his wife), dissatisfied Democrat, American (so he could be President some day), nonobservant Jew, and science fiction fan. Not necessarily in that order.

He's also one half of a special duo, along with Minnie, who is the co-habitor of the West Coast Bureau and Light Reading's primary chewer of sticks, though she is not the only one on the team who regularly munches on bark.

Wagner, whose previous positions include Editor-in-Chief at Internet Evolution and Executive Editor at InformationWeek, will be responsible for tracking and reporting on developments in Silicon Valley and other US West Coast hotspots of communications technology innovation.

Beats: Software-defined networking (SDN), network functions virtualization (NFV), IP networking, and colored foods (such as 'green rice').

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