Cisco's Acquisition Spree Continues With Jasper

With eleven acquisitions in 2015, Cisco Systems, Inc. (CSCO) has been on an acquisition spree. Continuing the trend, Cisco announced its intent to acquire Jasper Technologies, Inc. for $1.4 billion. The move is “all about making IoT [Internet of Things] simple, scalable and interoperable.” Cisco is enthusiastic about IoT and is counted among the most active IoT investors globally. It estimates that by 2020, the IoT will comprise 50 billion devices connected to the internet.

Santa Clara-based privately-held Jasper Technologies is a leading cloud-based IoT service platform with 3,500 enterprise customers and 27 service-providers across 100 countries. It not only helps connect companies, people to devices, but also manages the connectivity of IoT services through its Software as a Service (SaaS) platform. With Jasper on its side, Cisco will be in a strong position to offer complete IoT solutions, and benefit from the “disruption and opportunity” that IoT promises.

According to Cisco’s press release, “The proposed acquisition will allow Cisco to offer a complete IoT solution that is interoperable across devices and works with IoT service providers, application developers and an ecosystem of partners. Cisco will continue to build upon the Jasper IoT service platform and add new IoT services such as enterprise Wi-Fi, security for connected devices, and advanced analytics to better manage device usage.”

Although not a new concept, the Internet of Things has risen as a hot topic in the industry recently. A report in 2013 suggested that it was Kevin Ashton in the early 2000’s, who laid the foundation for what would become the Internet of Things (IoT) at MIT’s AutoID lab. IoT has the potential to change how individuals and businesses do things.

The idea basically involves connecting devices to other devices and people i.e. machine to machine or people to machine. It would connect anything and everything, be it a car, jet engine, printers, washing machine, doorbell, headphones to anything that comes to mind, on the internet. From the business point of view, IoT offers major benefits, which are cost-savings, improved asset allocation, improved productivity, efficient communication, control and processes.

An estimate by McKinsey & Company predicts that by 2020 the market for connected devices would be between 20 billion or 30 billion units. These figures are lower than its estimate between 50 billion and 100 billion units given three years back. While Gartner forecasts that connected things will reach 20.8 billion by 2020, while in 2016, 6.4 billion connected things will be in use worldwide, up 30% from 2015.

A report by Juniper Research expects the number of connected devices to be over 38 billion by 2020. A study by CB Insights, released in November 2015, showed that the IoT space, which includes IoT startups, deals and funding, investments by stage, most well-funded companies and active investors attracted around $7.5 billion in investment over 900 deals in the past six years. It further says that the funding to IoT start-ups has grown at a steady clip, more than doubling in five years from $768 million in 2010 to over $1.9 billion in 2014. The number of start-ups soared from 91 in 2010 to 221 in 2014.

To buy Jasper, Cisco will shell out $1.4 billion in cash and assumed equity awards, plus additional retention based incentives as per the terms of the agreement. The acquisition process is expected to close sometime during Q3 fiscal year 2016. Jaspers’ current CEO Jahangir Mohammed will run the new IoT Software Business Unit for Cisco.

“I am excited about the opportunity for Cisco and Jasper to accelerate how customers recognize the value of the Internet of Things,” said Chuck Robbins, Cisco Chief Executive Officer. “Together, we can enable service providers, enterprises and the broader ecosystem to connect, automate, manage, and analyze billions of connected things, across any network, creating new revenue streams and opportunities.”

Final Word

The IoT, which is fast building an ecosystem of connected devices with significant business benefits, is set to be valued at trillions of dollars, across industries in the coming decade. However, to realize the potential IoT offers, companies need to improve their standards in IT as well as management capabilities related to data and infrastructure. The integration of Jasper and Cisco will help companies bridge the gap and take them closer to success through complete IoT solutions.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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