The pending acquisition of AppDynamics represents a foundational move in Cisco’s efforts to provide better visibility into data center infrastructure, the Internet of Things (IoT), cloud, and security, Cisco officials said on a conference call today.

The call was Cisco’s first direct interaction with the media after yesterday evening's announcement of a $3.7 billion offer to purchase the startup, which had been on the verge of going public.

As the industry becomes more application-driven, “cloud vendors have been the single biggest tailwind for the company in terms of distributing apps and reducing visibility,” said David Wadhwani, AppDynamics' CEO. (After the deal closes, the plan is for AppDynamics to continue to be led by Wadhwani as a business within Tollope's IoT group.)

"And while we provide at Cisco a tremendous analytic and insight all the way from that data center through Tetration, and the network that we bring from a security perspective, that is really not enough," said Rowan Trollope, vice president and general manager of Cisco’s IoT and Applications unit. "You need to instrument and get insight — our customers need to get insight into the customer all the way down to the code. That is where AppDynamics is leading the market.”

Over the past year, Cisco has been looking at its analytics strategy more closely. The company launched the Tetration analytics platform for insight and analytics for the data center last June, and AppDynamics is able to provide insight into parts of the network that Tetration is not.

Cisco has been familiar with AppDynamics for quite some time and was even a customer before buying it out. This laid some of the groundwork toward making a deal happen, said Rob Salvagno, Cisco’s VP of corporate development.

In addition to combining AppDynamics’ intelligence at the application layer with Cisco’s at the infrastructure layer, Cisco plans to combine the companies’ sales channels, which are both focused on the enterprise, Salvago said.

AppDynamics' direct competitors are taking the acquisition in stride.

“Digital transformation is creating market opportunity for companies like AppDynamics, and a public offering indicates growth in the APM market generally,” says Aaron Rudger, Dynatrace senior director of product marketing. “Even prior to making the IPO, AppDynamics was and continues to be a very important solution provider in the market today.”

"This acquisition provides tremendous validation of the market opportunity in front of us,” wrote Lew Cirne, New Relic’s CEO and founder, in a prepared statement.