Cisco announced a $1.4 billion deal to acquire Jasper Technologies, in a move that significantly bolsters its Internet of Things (IoT) offering.

The deal gives Cisco an established start-up in the IoT segment, with Jasper operating a cloud-based platform that allows companies to connect devices – “from cars to jet engines to implanted pacemakers” – over cellular networks, and also has the software to manage the connectivity.

Another plus point is the company already works with some of the world’s largest enterprises and service providers, including large car manufacturers Nissan and Ford, as well as Amazon and General Electric. Cisco said Jasper manages and drives connected devices and services for more than 3,500 enterprises worldwide, working with 27 service provider groups globally.

The acquisition, Cisco’s largest since 2013, also ends speculation that the IoT player was planning an IPO, after claiming a valuation of $1 billion in 2014.

In a statement, Cisco said it will look to continue to build upon Jasper’s platform, and add new IoT services, “such as enterprise Wi-Fi, security for connected devices, and advanced analytics to better manage device usage”.

“I am excited about the opportunity for Cisco and Jasper to accelerate how customers recognise the value of the Internet of Things,” commented Chuck Robbins, Cisco CEO, who took over from veteran John Chambers last year.

“Together, we can enable service providers, enterprises and the broader ecosystem to connect, automate, manage and analyse billions of connected things, across any network, creating new revenue streams and opportunities.”

Jasper “finds a home”
Analyst firm Machina Research believes the deal, on a strategic level, “makes a lot of sense and certainly strengthens Cisco’s IoT hand”.

It also sees Jasper “find a home” as Machina puts it, with the company opting for an exit through acquisition rather than continuing to operate as a standalone niche player, that would have been compatible with the IPO option.

“Machina Research has always been of the belief that software platform companies such as Jasper needed to find a home,” it said. “Existing as a stand alone product will work for a limited period of time but ultimately the long term competitive differentiators for software are nil. Someone can always replicate.”

In a blog post, Cisco’s VP of corporate business development Rob Salvagno added that Jasper had a “unique” IoT service platform “that is disrupting a massive market”.

Jasper CEO Jahangir Mohammed will be handed the job to run the new IoT software business unit, added Cisco.

It will pay for the proposed acquisition in cash and assumed equity awards, plus additional retention based incentives, and expects the acquisition to close in Q3 this year, “subject to customary closing conditions”.