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Cisco to Pay $175 Million for Sweden's Tail-f Systems

A move to make managing networks simpler.

Cisco Systems PR

Networking giant Cisco Systems said today it will pay $175 million to buy Tail-f Systems, a privately held company based in Sweden that makes systems for managing networks.

The deal marks only Cisco’s second acquisition this year. The first was for New York-based ThreatGrid, announced last month. Cisco acquired 10 companies in 2013, 11 companies in 2012, six in 2011 and five in 2010.

Tail-f was started in 2005 and has offices in Stockholm and Santa Clara, Calif. Big networking service providers like Deutsche Telekom and AT&T use its products.

The company specializes in a development sector of the networking business known as network function virtualization, or NFV. In English, that’s essentially technology that gives telecom carriers the ability to deploy different services by making changes to the software running on their equipment, without having to go through the expense of switching the physical hardware.

As analyst Brian Marshall of ISI put it in a note to clients summarizing the deal today, Tail-f’s Network Control System, or NCS, “allows network operators to manage all of their servers, network devices and network applications/services from a single interface” that works with all kinds of networking equipment.

In a blog post announcing the deal, Cisco’s head of business development, Hilton Romanski, said Tail-f’s technology would help Cisco customers deploy new services faster and with less complexity.

Cisco’s not the only one building up its capabilities around NFV. Rival Hewlett-Packard recently created a new business unit to develop opportunities in NFV and tapped Bethany Mayer, the former head of its larger networking business, to run it.

It’s a small deal for Cisco, which has more than $50 billion in combined cash and short-term investments on its balance sheet.

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