Cisco is buying out of one of its optical equipment suppliers in a $2.6 billion deal. Acacia Communications will become part of Cisco’s Optical Systems and Optics group under its networking and security business.
“With the explosion of bandwidth in the multi-cloud era, optical interconnect technologies are becoming increasingly strategic,” said David Goeckeler, EVP and GM of Cisco’s networking and security business. “The acquisition of Acacia will allow us to build on the strength of our switching, routing and optical networking portfolio to address our customers’ most demanding requirements.”
The deal is expected to close in the second half of next year. Cisco said that the acquisition will “enrich [its]optical systems portfolio and “allow … customers transitioning from chassis-based systems to pluggable technology to simplify operations and reduce network complexities.”
In a blog post on the acquisition, Cisco’s Bill Gartner, primary challenges for cloud and service providers in Data Center Interconnect (DCI), metro and long haul networks are to increase the capacity on existing fiber infrastructure, drive down the cost per bit, and automate in order to lower operational expenses and eliminate human error.
“Solutions to these challenges will drive significant architectural shifts for service providers,” Gartner said. “A key trend in this segment is the migration from chassis-based solutions to pluggable optics. Functions that were traditionally delivered in separate chassis-based solutions in a separate optical layer will be available in a pluggable form factor as part of the IP layer – offering significant benefits for network operators in terms of operational simplicity and lower cost.
“Cisco considers silicon, optics and software foundational technologies for continuing to deliver industry-leading innovations in routing and switching, and we see the emergence of pluggables serving the DCI, Metro and Long Haul segments as an important transition for customers,” Gartner added.
Massachusetts-based Acacia designs, develops and manufactures communication equipment, including optical interconnect products for cloud infrastructure, content providers and communication service providers. Vladimir Kozlov, chief executive of research firm LightCounting, told EETimes that the deal will make it harder for Cisco’s OEM rivals (such as Nokia, Ciena, Huawei, Juniper, and Arista) to compete in core routers, Ethernet switches, and optical transport equipment.
Cisco publicized a number of its network-related deals with telecom providers at this year’s Mobile World Congress in Barcelona, from a software-defined wide area network platform arrangement with Verizon to network routing technology upgrades for Sprint and Indian operator Airtel.