Cisco’s US$1.4bn acquisition of Jasper shows determination to gain a stronghold in IoT

San Jose, CA, USA. February 3, 2016 – Cisco (NASDAQ:CSCO) today announced its intention to acquire Jasper Technologies, Inc., a privately-held company based in Santa Clara. Jasper delivers a cloud-based IoT service platform to help enterprises and service providers launch, manage and monetise Internet of Things services globally.

As Jeremy Cowan reports, under the terms of the agreement, Cisco will pay US$1.4 billion in cash and assumed equity awards, plus additional retention-based incentives. The deal follows just one week after Cisco’s announced investment in Kii Corporation of Japan. (See: Cisco invests in Kii as the companies bring IoE platform and solutions to market.)

Jasper is one of the industry’s leading IoT service platforms, and is claimed to be the largest by number of enterprises and service provider clients. Many of the world’s largest enterprises and service providers are using the Jasper platform to scale their IoT services business globally. Companies can connect any device to its platform – from cars to jet engines to implanted pacemakers – over the cellular networks of leading service providers, and then manage connectivity of IoT services through Jasper’s Software as a Service (SaaS) platform.

IoT brings with it many complexities, such as connecting and securing millions of devices and collecting and analysing data. Jasper simplifies these challenges and helps customers accelerate the shift to IoT. The Jasper IoT service platform automates the management of IoT services across connected devices and enables companies to create new business models that transform their products into connected services and generate new sources of ongoing revenue.

Jasper develops and provides a SaaS platform with a predictable, recurring revenue IoT business that manages and drives a wide range of connected devices and services for more than 3500 enterprises worldwide, working with 27 service provider groups globally.

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.

Chuck Robbins, Cisco's chief executive officer
Chuck Robbins, Cisco’s chief executive officer

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

 

 

 

 

“IoT has become a business imperative across the globe. Enterprises in every industry need integrated solutions that give them complete visibility and control over their connected services, while also being simple to implement, manage and scale,” said Jahangir Mohammed, Jasper’s CEO. “By coming together, Jasper and Cisco will help mobile operators and enterprises accelerate their IoT success.”

Jahangir Mohammed, Jasper's CEO
Jahangir Mohammed, Jasper’s CEO

Jahangir Mohammed will run the new IoT Software Business Unit under Rowan Trollope, Cisco senior vice president and general manager, IoT and Collaboration Technology Group. The acquisition is expected to close in the third quarter of fiscal year 2016, subject to customary closing conditions.

Acquisition follows one week after Kii investment

Cisco recently confirmed its ambitions in this space with its investment in Kii, a Japan-based platform company enabling mobility and IoT solutions for global customers. On January 26 IoT Now reported that Cisco Investments, Cisco’s corporate venture capital arm, is making an investment in Kii.

Kii Corporation’s global platform enables device manufacturers and Internet of Everything (‘Internet of Everything’ is Cisco’s preferred term for the Internet of Things. Ed) solution providers to create connected solutions with new data sources generated from IoT to be integrated into cloud service and analytics-driven application models in a wide range of IoE use cases.

End of connectivity under-investment worries, says analyst

According to analyst Steve Hilton at MachNation, an IoT industry analyst firm, this acquisition means several things for enterprises and communications carriers. First, “with the acquisition, Cisco will play a major role in managing the network for both gateway-centric and cellular IoT solutions. Enterprises will no longer have to use multiple vendors to manage the IoT LAN and WAN environments. The combination of Cisco and Jasper technologies will make it easier for businesses to connect. IoT connectivity management and IoT network management will hopefully become more simple.”

Steve Hilton of MachNation
Steve Hilton of MachNation

Hilton continues, “Carriers will no longer have to worry about under-investment in IoT connectivity management. Cisco, with its strong focus on IoT, will ensure that the Jasper solutions will receive proper investment and a good product roadmap.” He adds that, “by leveraging Jasper’s client base, Cisco will further built out its network of carrier and enterprise for development, deployment and maintenance of IoT solutions.”

A spokesman for Machina Research told IoT Now, “The fact that Jasper would be looking for some form of exit has been the worst kept secret in Silicon Valley —  not a secret at all. The favoured option had always seemed like being IPO (initial public offering), so an exit through an acquisition indicates that Jasper’s growth prospects as a standalone player are more uncertain than was expected, say, in 2014, when its Series F famously valued the company at $1 billion. On the strategical level this acquisition makes a lot of sense and certainly strengthens Cisco’s IoT hand.”

“Machina Research has noted in the past that the addition of Jasper’s Control Center connectivity management capability would fill a gap in the Cisco portfolio. Cisco has always had a strong message for enterprises, various vertical sectors, network infrastructure and hardware. However, it lacked the cellular connectivity capabilities to have a truly compelling IoT message for service providers. This acquisition bolsters that offering substantially, and is a vote of confidence for the SP business at Cisco. We have always assumed that the price tag in excess of $1 billion would put off any would-be suitor. It seems that Cisco has been sufficiently convinced of the opportunities in the sector to accept that level of spending.”

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