Cisco Bets Bigger on the Cloud

Despite all of its problems making some acquisitions pay off, Cisco (Nasdaq: CSCO  ) won't stop purchasing expertise. The latest buy: Virtuata, a small firm that specializes in securing virtual machines.

There's merit to the idea. Virtual machines act as the engines of the Web because of how they divide server, storage, software, and other resources into bite-sized optimized chunks, which are then assigned to process computing jobs. Virtualization software supplier Citrix (Nasdaq: CTXS  ) is a partner.

Think of virtual machines as the Great and Powerful Oz of the Web, masters of the behind-the-curtain magic that makes webby goodness appear in a browser. Virtuata puts a lock and key on these conjurers to keep them safe. Cisco, for its part, sees that as an essential piece of a broader strategy.

"This acquisition [of Virtuata] is highly complementary to Cisco's vision of a unified data center that securely connects people and businesses with applications and data through virtual and cloud environments," wrote business development chief Hilton Romanski in a blog post this week.

We've heard this before. Cisco, like tech industry peer Oracle (Nasdaq: ORCL  ) , acquires in order to build out its platform in hopes of fighting off competition from specialist peers. Here, the company's strategy is to merge servers with networking equipment and software in a simplified, cohesive product line that does most of the work when it comes to shuttling data back and forth across every location in a geographically distributed enterprise. It's a vision the Fool's own systems engineers have bought into.

Now, the hope is platform buyers like us Fools will upgrade to Virtuata and other new tools as they become integrated into Cisco's patchwork. Can the plan succeed? I suppose it depends on whom you ask, but if we can learn anything from Oracle in this situation, it's that buyers who commit to a whole platform tend to stay with it.

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Fool contributor Tim Beyers is a member of the Motley Fool Rule Breakers stock-picking team and the Motley Fool Supernova Odyssey I mission. He didn't own shares in any of the companies mentioned in this article at the time of publication. Check out Tim's web home, portfolio holdings and Foolish writings, or connect with him on Google+ or Twitter, where he goes by @milehighfool. You can also get his insights delivered directly to your RSS reader.

The Motley Fool owns shares of Oracle and Cisco Systems. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.


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