infoTECH Feature

July 01, 2015

Wheelings & Dealings: Cisco Targets OpenDNS in Nine-Figure Acquisition

Network security is front-of-mind for a lot of companies these days, and Cisco (News - Alert) is no different. A new report direct from Cisco says the company is looking to pick up network security firm OpenDNS in a deal valued at $635 million in cash, which is expected to conclude in the opening days of 2016.

The reports suggest that the move is geared toward bolstering Cisco's security operations, which makes sense given that OpenDNS holds a network of domain name servers (DNS) that allow Web traffic to be routed in new ways. More specifically, the traffic can be routed in a way that allows it to better compete with routes offered by telecommunications firms and Internet service providers (ISPs) in general. With OpenDNS' servers, both individuals and companies can reportedly reach websites more rapidly, as well as accomplish other tasks.

It appears Cisco will be keeping most of OpenDNS' employees; the deal is said to not only include cash and assumed equity awards, but also some retention incentives for OpenDNS' more than 300 employees. What's more, OpenDNS' CEO, David Ulevich, is expected to keep running OpenDNS, though under Cisco's leadership.

OpenDNS even comes with a major user base numbered around 65 million users strong, operating out of 25 separate data centers. But recently, OpenDNS started emphasizing security instead of speed, noting that its routing capabilities can serve several worthwhile security purposes, like blocking attacks staged from certain domains as well as encrypting Web traffic so as to prevent eavesdropping. This makes OpenDNS an excellent cohort for Cisco, whose focus is on routing and switching systems geared toward moving information.

Better yet, while OpenDNS has been emphasizing security more of late, so too has Cisco, and Cisco's move to acquire OpenDNS shows the similarity in movements the two companies offer. Cisco taking over OpenDNS would seem to be a natural extension of both Cisco's and OpenDNS' efforts in the security space. Cisco also recently picked up Sourcefire for $2.7 billion and, later, ThreatGrid Inc. Security actually represented 4.3 percent of Cisco's revenue in 2014.

To suggest that OpenDNS is almost Cisco on a smaller scale is oversimplifying things, but the two firms do have a lot of fingers in the same pies, so to speak. So Cisco bringing in OpenDNS' client lists and operations should give Cisco a little extra spark in the market.

And now, with Cisco's resources involved, OpenDNS' development might prove better than ever. This should end well for both parties involved; we'll have to wait for early 2016 to see just how well.




Edited by Dominick Sorrentino
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