Cisco seeks to ‘hyperconverge’ growth with $320M Springpath buy

If you’re going to converge on something, why just engage in boring old “convergence?” Why not liven things up with some hyperconvergence?

Well, that seems to be the philosophy behind Cisco Systems’ latest acquisition, Sunnyvale-based hyperconvergence software company Springpath. The deal will cost Cisco $320 million, and is expected to close during Cisco’s current, fiscal first quarter.

So, what is “hyperconvergence software,” and why would Cisco fork over $320 million for a company that does such a thing? Let’s hear it from Cisco itself.

“Springpath has developed a distributed file system purpose-built for hyperconvergence that enables server-based storage systems,” Cisco said in a statement announcing the deal. “The acquisition will allow Cisco to continue to deliver next-generation data center innovation to its customers.”

There. As simple to understand as baseball’s balk and infield fly rules, right?

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OK, to put it in as-close-to-layman’s terms as possible,¬†Springpath makes software that lets computer servers do more stuff. The Springpath software turns servers into a pool of storage gear, and lets a company cut down on having to have specific servers for specific functions. And when a company can do that, it can spend less on the classic “big iron” computing equipment that it needs to run its operations.

Cisco sells a lot of networking and switch equipment. These products have been the company’s bread and butter for years. And their sales are falling. While this has been going on, Cisco two-years-on-the-job-Chief Executive Chuck Robbins has been trying to beef up its software and subscription-based business lines. And Springpath fits into both the software and hardware side of the Cisco equation.

For Cisco, adding Springpath gives it another piece of software that it can use to hook customers into its subscription plans and build up the recurring revenue that made up 31 percent of its total sales in the last quarter. And after three straight quarters of year-over-year overall sales declines (and at least one more on the way) Cisco must be hoping that its new acquisition will hyperconverge with what it already does to get revenue heading back in a positive direction.

Photo: An exterior view of Cisco Systems headquarters in Santa Clara in 2012. Cisco has agreed to acquire Sunnyvale-based Springpath, a maker of hyperconvergence software for computer servers, for $320 million. (Paul Sakuma/AP)


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