Cisco pays $1.4B in cash for IoT unicorn Jasper – Why make the deal?

Cisco Systems (Nasdaq: CSCO) is buying Jasper Technologies for $1.4 billion in cash in a move to help its customers connect, automate and manage billions of Internet-connected devices ranging from cars to jet engines to implanted pacemakers.

Privately held Jasper – a so-called “unicorn” as a venture capital-backed startup worth $1 billion or more – has developed the industry’s leading platform for what’s known in technology parlance as the “Internet of Things” that encompasses a growing range of connected devices, appliances and machines.

Cisco says it plans to add new Internet of Things services including enterprise Wi-Fi, security for connected devices, and advanced analytics to better manage device usage.

Why make the deal?

The IoT market is exploding in value. IDC projects IoT will generate nearly $1.3 trillion in business by 2019, up from $698.6 million in 2015.

“Rowan Trollope, who leads the Cisco group that includes the Internet of things, explained that more of the company’s customers are looking to connect to devices that, until recently, were impossible to connect, like pacemakers and automobiles,” reported Fortune. Jasper helps meet that problem, he said.

“Companies are sprinting toward this future but they are hobbling by the challenges,” Trollope said in a conference call.

“It gives the customer everything they need, essentially, to build a connected business,” he added. “What that means is that our customer can connect a car, a jet engine, a pacemaker or an ankle bracelet easily.”

Jasper CEO Jahangir Mohammed, who will join Cisco and lead its IoT Software Business Unit, said the “IoT is about transitioning of product businesses to dynamic services businesses,” eWeek noted.

However, the deal doesn’t make Cisco a one-stop shop. IDG added.

Machina Research analyst Isabel Chapman told IDG: “It does position Cisco strongly in the connectivity support and connectivity platforms space, but … those platforms don’t comprise the entire IoT platforms stack.”

Jasper, based in Santa Clara, California, has more than 3,500 customers in 100 countries.

Cisco of San Jose, California, will pay Jasper additional but unspecified “retention-based incentives.”

Research Triangle Park is home to one of Cisco’s largest corporate campuses.