Cisco acquires OpenDNS for $635M, bolsters security play

Cisco has reached an agreement to acquire OpenDNS, a provider of cloud-based security solutions for $635 million, a move that will enhance its security services capabilities.  

The company said the acquisition will benefit its Security Everywhere approach by giving it visibility and threat intelligence from OpenDNS' cloud-based platform.

By offering a cloud platform that delivers security in a Software-as-a- Service (SaaS) model, Cisco's customers will be able to deploy and integrate the product as part of their defense architecture or incident response strategies.

"The acquisition will extend our ability to provide customers enhanced visibility and threat protection for unmonitored and potentially unsecure entry points into the network, and to quickly and efficiently deploy and integrate these capabilities as part of their defense architecture," wrote Hilton Romanski, senior vice president and head of business development for Cisco, in a blog post. "This acquisition builds on Cisco's security strategy, adding broad visibility and predictive threat intelligence from OpenDNS' cloud platform, accessed by more than 65 million users daily."

Initially, OpenDNS found a niche in maintaining a network of domain name servers to enable the routing of Web traffic competing with ISPs and traditional service providers. Companies and individual users can use OpenDNS services to reach websites more quickly. Cisco said OpenDNS has over 65 million users that it serves out of 25 data centers.

OpenDNS said it had been realigning its focus on developing services that can halt attacks from specific Internet domains and encrypt Web traffic that can curtail eavesdropping and other threats from hackers.

These threats will likely continue to rise as the growing digital economy and the Internet over Everything (IoE) trends grow. What this means is there will be 50 billion connected devices by the year 2020, creating a number of potential network security breaches.

Upon completion of the deal, the OpenDNS team will join the Cisco Security Business Group organization led by David Goeckeler, senior vice president and general manager. The purchase price includes equity awards and retention-based incentives for OpenDNS staff. Cisco said the acquisition is expected to close in the first quarter of its fiscal year 2016. 

Cisco's heritage may be in the routing and switching segments serving telecom providers and data center providers, the vendor has been enhancing its security software and services lines internally and through targeted acquisitions.  

In addition to OpenDNS, Cisco acquired cybersecurity vendor Sourcefire for $2.7 billion and malware-detection technology company ThreatGrid Inc.

While the security business only represented about 4.3 percent of Cisco's revenue in 2014, it's clear the company wants to grow this segment.

For more:
- see the release
- see this blog post
- WSJ has this article

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