Cisco Snatches AppDynamics From The Jaws Of An IPO With A $3.7 Billion Acquisition

Cisco on Tuesday said it is planning to pay $3.7 billion to acquire AppDynamics, a provider of cloud application and business monitoring technology.

The combination of Cisco and AppDynamics is aimed at giving customers intelligent and actionable insights to help speed up business decisions and improve business performance, Cisco said.

The acquisition announcement comes just as the IT industry was looking forward to an expected AppDynamics IPO.

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The AppDynamics acquisition is slated to close in Cisco’s third fiscal 2017 quarter. It is slated to become a new business unit under Rowan Trollope, senior vice president and general manager for Cisco's IoT and applications business. The division is expected to be led by current AppDynamics CEO David Wadhwani.

Rob Salvagno, Cisco's vice president of corporate business development, in a Tuesday blog post wrote that digital transformation and the cloud are making application performance ever more critical.

"Combining real-time visibility and intelligence at the network, security and application layers is transformational for companies. It can provide them with insight into the state of their business and most importantly, into the quality of their customers’ experiences," Salvagno wrote.

AppDynamics helps enterprises translate application data into business insights and provide end-to-end insight across their technology stack, Salvagno wrote.

"AppDynamics also supports Cisco’s strategic transition toward software-centric solutions that deliver predictable recurring revenue," he wrote.

The acquisition is a brilliant move by Cisco, said John Woodall, vice president of engineering at Integrated Archive Systems, a Palo Alto, Calif.-based solution provider and channel partner of both Cisco and AppDynamics.

Woodall told CRN he was unable to comment on whether the $3.7 billion price tag for AppDynamics was high or low.

"But AppDynamics is a great product," Woodall said. "In a world which is increasingly software-defined and where DevOps is more and more common, having the level of application awareness provided by AppDynamics makes a lot of sense for Cisco."

Cisco, with its strategy for IoT and fog computing, has a lot of opportunities to take advantage of the AppDynamics technology, Woodall said.

For IAS, AppDynamics, along with a few other applications, has become an important tool, he said.

"We work with Splunk for machine data, and with ExtraHop for wire data," he said. "AppDynamics is the third leg of a three-legged stool. It gives us a look at application-specific data. It's a very impressive tool for understanding applications and their latencies, bad code and so on."

Cisco was unable to comment further on the acquisition as of press time. However, Trollope, in a prepared statement, said keeping applications running and performing well has become a critical task, but one that is increasingly complex.

"The combination of Cisco and AppDynamics will allow us to provide end to end visibility and intelligence from the network through to the application; which, combined with security and scale, and help IT to drive a new level of business results," Trollope said in the statement.