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Cisco Just Bought This Startup for More Data Center Muscle

Aug 30, 2016

Cisco just bulked up a little in data center software muscle.

The networking giant said Tuesday that it plans to buy a small San Jose startup, ContainerX, for an undisclosed amount. The startup has eight employees, some of whom previously worked at big enterprise technology companies like VMware, Microsoft and Citrix.

Like its name implies, ContainerX specializes in a type of developer and data center infrastructure technology called containers. Developers tend to use containers to build complex software apps that can run with multiple cloud computing providers like Amazon’s (amzn) or a company’s internal data centers.

Google (goog) has used containers within its own data centers for several years to improve the efficiency of its I.T. operations and released a free tool to manage containers called Kubernetes. Several other startups have emerged in recent years that have helped popularize containers and data center software including Docker, which has raised over $150 million, and Mesosphere, which raised $73.5 million in March led by Hewlett Packard Enterprise (hpe).

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Cisco’s (csco) acquisition of ContainerX marks its “first acquisition in the rapidly emerging container market,” Rob Salvagno, the head of corporate development and Cisco Investments, wrote in a blog post.

In March, Cisco introduced a new data center product that combines traditional data center management software and hardware like storage, servers, and networking equipment. Cisco also bragged that the new product can help companies manage containers, so buying ContainerX makes sense in that Cisco will need talent with container expertise to help it develop the appropriate software.

ContainerX CEO Kiran Kamity wrote in a blog post that his startup will suspend technical support for its container management products. Suspending support implies that Cisco bought ContainerX for its employees, and less for its technology.

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“As with any acquisition, there are a few things we need to figure out as we join forces with Cisco,” wrote Kamity.

Cisco's small acquisition comes at a time when the networking company recently said it will layoff 5,500 employees, which equates to roughly 7% of its workforce. The goal was to focus efforts on more cutting-edge technology like cybersecurity and newer data center technologies while presumably cutting back on staff for the company's legacy and slowing routing and switching business.

According to California's Employment Development Department, Cisco has so far laid off 899 California-based employees as of August 18.

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