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Cisco Just Bought This Networking Security Startup

Robbins listens a question from media during a news conference in New DelhiRobbins listens a question from media during a news conference in New Delhi
Cisco CEO Chuck RobbinsPhotograph by Adnan Abidi — Reuters

Cisco is making another play to grow its cybersecurity business.

The networking giant said Thursday that it plans to buy security startup Observable Networks. Financial terms of the deal were not disclosed.

Observable Networks specializes in a security technique called endpoint modeling that helps companies track how people use devices like smartphones that are connected to corporate networks. Businesses can use this technology to determine whether those connected devices do any unusual behavior like trying to connect to networks that they aren’t supposed to, which can indicate that a hacker is tampering with them.

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One possible reason for Cisco’s (CSCO) interest in buying Observable Networks is that the startup sells its security service as a subscription. Cisco is currently overhauling its business to focus on selling networking services by subscription as its core data center switch and router business slows.

More businesses are buying computing resources on demand from tech giants like Amazon (AMZN) and Microsoft (MSFT), which has hurt big data center hardware companies like Cisco and Hewlett Packard Enterprise (HPE).

But while Amazon Web Services and Microsoft Azure pose challenges for Cisco, the networking giant is also finding ways to ensure its technology works well with those cloud companies’ services. For example, customers can subscribe to Observable Networks’ security service to monitor devices connected to Amazon Web Services and Microsoft Azure. With Cisco acquiring Observable Networks, customers can now buy another Cisco-service that works with the cloud computing giants.