Cisco Just Bought This Hot Startup For Over $1 Billion

February 3, 2016, 11:52 PM UTC

Cisco’s made its first acquisition in 2016, and it was a big one.

The networking titan said on Wednesday that it had bought a Silicon Valley startup called Jasper Technologies for $1.4 billion. Jasper specializes in software that helps manage wireless connections for Internet-connected equipment.

It counts a number of big companies as customers, including Nissan, Coca-Cola (KO), and Starbucks (SBUX). Coca-Cola, for example, uses Jasper’s software to connect its vending machines online so that the company knows when the machines need to be refilled.

The company is seen as a big player in the Internet of things, the burgeoning sector of connected gear. Jasper was also a Fortune unicorn, tech jargon for a startup worth $1 billion or more.

In 2014, the Wall Street Journal reported that the company was planning a possible initial public offering. But it chose to sell instead, at around the price of its latest private valuation.

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Cisco (CSCO) has made it clear that it views the Internet of things as an area it wants to dominate as the technology progresses. In a conference call about the announcement, Rowan Trollope, who leads the Cisco group that includes the Internet of things, explained that more of the company’s customers are looking to connect to devices that, until recently, were impossible to connect, like pacemakers and automobiles.

The problem is that connecting these devices can be challenging without the appropriate technology, which is what Jasper focuses on, he said.

“Companies are sprinting toward this future but they are hobbling by the challenges,” Trollope said.

Cisco’s plan is to use Jasper’s technology as the glue that hooks together a company’s multiple connected devices, and from there provide network management and data analytics services on top of it, Trollope explained. Jasper also has a number of mobile service provider customers, including AT&T (T) and Telefónica.

Cisco has been trying to accommodate the technological needs of telecommunication companies like AT&T that are seeing an explosion of data on their wireless networks due partly to people watching video on their phones. That’s why it signed a blockbuster partnership with telecommunication gear maker Ericsson in November to provide the gear and services that Cisco lacked for managing mobile networks.

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By buying Jasper, Trollope said that Cisco now has more services to accommodate those mobile service providers. When asked by an analyst whether some of Ericsson’s technology competes with Jasper’s technology, Trollope dismissed the notion by saying, “This is a really big market, and no one company will solve across every single use case and service provider.”

He said that the deal with Jasper was “well received by the executive leadership” of Ericsson.

As part of the acquisition, Cisco will add 385 employees.

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