Logicalis Acquires Top Cisco Gold Partner

Logicalis, one of the top Cisco Gold partners in the world, has added even more Cisco muscle to its roster with the acquisition of Network Infrastructure Corporation (NIC), a $20-million, Phoenix, Ariz. Cisco Gold network services partner.

The price and terms of the deal to acquire the 16-year-old privately held NIC, a network services company with about 50 percent of annual sales composed of recurring revenue, were not disclosed.

The acquisition provides Logicalis, number 76 on the VAR 500 with numerous Cisco awards this year, including technology excellence partner of the year in emerging markets, with a strong Cisco network services foothold in the Southwest and access to some of the top Cisco technical talent in the country.

NIC bills itself as a total network services provider with the distinction of being the first Cisco Gold partner in the world to run Cisco Telepresence over wireless and the first in Arizona to integrate Cisco Telepresence in education.

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NIC has 60 employees with 50 percent of them providing network services. That's considerably more than a typical VAR of that size. NIC has a particularly strong education account base offering schools network services, inter-campus wireless connectivity, video-on-demand and physical security offerings.

"We are extremely excited about the quality of the people and the management team," said Logicalis U.S. CFO Greg Baker. "The CEO is a visionary with a proven business model and the entire team is extremely important to us." Patrick Sobel, the founder, president and CEO of NIC, in fact, will become an integral part of Logicalis' management team.

"The reason we were so interested in NIC is their technical team and go-to-market strategy aligned with us very well," said Baker. "They have the technical skills and expertise in the education market that we feel we can extend nationwide over time." The first priority, though is to use Logicalis' strong network services set to become even more dominant in the Southwest market, said Baker. He said that NIC's network services talent will be critical as more and more companies do network refreshes that have been delayed over the last several years because of the economic downturn. NIC also has key state and local government, gaming and hospitality accounts in the Southwest.

The deal comes with many solution providers across the country grappling with a technology landscape demanding bigger investments to play in the fast growing cloud computing services marketplace.

Next: Prominent Cisco Gold Network Services Acquisitions

In the enterprise market, solution providers must make huge capital investments in cloud computing services infrastructure including a world class data center with disaster recovery functionality in order to "stay relevant," said Baker.

"You now need to be able to not only help customers manage their internal IT assets but rent them compute power as an operating expense as part of a monthly bill," said Baker. That requires a massive capital expenditure in data center infrastructure with the ability to provide hosted e-mail and storage. "Some of the smaller guys are looking at those investments and squinting," Baker said. "That's causing more of them to think about an exit strategy."

Logicialis, for its part, has invested several million dollars over the last year to become a more dominant cloud player, said Baker. The acquisition provides NIC clients immediate access to the full range of Logicalis cloud computing services, outsourced services and data center services.

Logicalis earlier this year opened a cloud computing services center in the U.K. based on Cisco's Unified Compute System (UCS). Logicalis, one of Cisco's first UCS partners, is also working on cloud solutions with HP and IBM. Logicalis teamed with HP on a cloud computing services program in August.

"We are committed to providing very specific cloud solutions to our customers," said Baker. "We can provide them a safe and trusted path to outsource more of their computing needs so they don't have to continue to go through the capital expenditure (IT budget) cycle every year justifying huge investments in hardware." The cloud computing services model requires customers to have a trusted IT partner like Logicalis so they feel comfortable "relinquishing server and storage control" with the knowledge that they have instant access to "top notch" technical talent and services, said Baker.

Baker said he sees more channel consolidation continuing in 2011. "There has been a marked increase in the number of businesses up for sale or looking for a buyer either formally or informally over the last year or two," he said.

Many solution providers were able to get through 2009 and 2010, but with no major economic rebound in sight are now looking at exit strategies, he said.

"We will continue to be very acquisitive in the U.S. and globally," said Baker. "Don't be surprised if you hear about another acquisition from us in the not too distant future."

Some of the most prominent acquisitions in the channel recently were centered on Cisco Gold partners: Sirius Computer Solutions, one of IBM's top partners at number 87 on the VAR 500 with sales of $693.8 million, closed its acquisition this week of MSI Systems Integrators, a Cisco Gold partner at number 133 on the VAR 500 VAR 500, to create a $1 billion VAR behemoth. The deal gives Sirius access to some of the top Cisco Gold technical talent in the country to accelerate its network services and cloud services reach.

What's more, Tokyo-based Nippon Telegraph and Telephone finalized its acquisition of Cisco Gold partner Dimension Data, in October of Dimension Data and number 30 on the VAR 500 with $3.97 billion in sales. The deal gives NTT, a network services power, critical network services muscle in the U.S. market.