RESEARCH TRIANGLE PARK – In a bid to increase speed across the cloud and the Internet of Things world that includes billions of devices, Cisco is buying California-based Luxtera for $660 million. The news came as layoffs hit Cisco’s startup efforts.

The all-cash deal for Luxtera was announced Tuesday.

Luxtera focuses on silicon photonics technology to speed up data processing for large webscale and company data centers.

“Luxtera’s technology, design, and manufacturing innovation significantly improves chip scale and performance, while lowering costs,” Cisco (Nasdaq: CSCO) explained in the announcement. “Cisco plans to incorporate Luxtera’s technology across its intent-based networking portfolio, spanning enterprise, data center and service provider markets.”

“With Cisco’s 2018 Visual Networking Index projecting that global Internet traffic will increase threefold over the next five years, our customers are facing an exponential demand for Internet bandwidth,” said David Goeckeler, executive vice president and general manager for Networking and Security Business at Cisco, in the deal announcement. “Optics is a fundamental technology to enable this future. Coupled with our silicon and optics innovation, Luxtera will allow our customers to build the biggest, fastest and most efficient networks in the world.”

The deal is expected to close in 2019.

“[Webscale providers] say, deliver me the performance, deliver the reliability, deliver the form factor and deliver the cost, and if you can do those things, you can have my business,” Bill Gartner, general manager of Cisco’s Optical Systems and Optics Group, explained to network news site Light Reading.

Providers want “the lowest cost per bit while moving all this capacity around the data center — and in and out of the data center — [they] need to get the lowest cost per bit,” he added in the interview.

Cisco explained key points of the deal:

  • Future-Proof Networks for Emerging Applications: The emerging class of distributed cloud, mobility, and IoT applications is creating an unprecedented strain on existing communications infrastructure. The combination of Cisco’s and Luxtera’s capabilities in 100 Gigabit Ethernet (GbE)/400GbE optics, silicon, and process technology will enable customers to build future-proof networks optimized for performance, reliability, and cost.
  •  Expand Cisco’s 100GbE and 400GbE Portfolio: Integration of Luxtera and Cisco’s optical transceiver portfolio will broaden Cisco’s offering of 100GbE and 400GbE optics. As system port capacity increases from 100GbE to 400GbE and beyond, optics plays an increasingly important role in addressing network infrastructure constraints, particularly density and power requirements.

Layoffs hit startup efforts

According to the Silicon Valley Business Journal, not all the news from Cisco on Tuesday was pleasant.

“The Cisco Hyperinnovation Living Labs, known as ‘CHILL,’ and its employees are being consolidated and moved, Cisco confirmed to the Business Journal on Monday,” the newspaper reported. “Multiple sources told the Business Journal that San Jose-based Cisco in December laid off the majority of the CHILL team with plans to further scale back the program.”

The full story is available online (subscription required).

Cisco operates one of its largest campuses and employees several thousand people in RTP.