Cisco Systems is betting on the shift to Software-Defined Networking and is buying startup networking vendor Tail-f Systems for $175 million in cash and retention bonuses. The deal comes amid the start of a major shift in network design to SDN and Network Function Virtualization, which will virtualize traditional hardware functions in the network and turn them into software. The idea is that it will let carriers more easily change and program their network via software without changing hardware, which will become a commodity. Managing all of that is what Tail-f specializes in; the Swedish vendor focuses on handling multi-vendor network service orchestration solutions for both traditional and virtualized networks. That expertise led AT&T (NYSE: T) to name Tail-f earlier this year as one of its initial vendors for its Domain 2.0 program, designed to help AT&T move into a future dominated by SDN and NFV. Deutsche Telekom announced a deal to work with Tail-f in 2013. In making the deal, Cisco said it is committed to the open standards, architectures, and multi-vendor environments that Tail-f has embraced.
Hilton Romanski, Cisco's senior vice president of corporate development, said in a statement the deal "will extend Cisco's innovation in network function virtualization, helping service providers reduce operating costs and the time it takes to deploy new services, making agile service provisioning a reality." The Tail-f team will become part of Cisco's cloud and virtualization group led by Gee Rittenhouse. The deal is expected to close during the third quarter. Release