The acquisition is the first Cisco has announced since the May confirmation that Chuck Robbins would replace retiring CEO John Chambers at the end of July. Chambers is expected to play a key role in Cisco’s security business as executive chairman following the transition.
Founded in 2005 as a domain server provider, OpenDNS began focusing on security products roughly three years ago, a pivot that helped the San Francisco startup raise an additional $44.3 million in venture funding, on top of the $7 million it had raised prior to 2013. Cisco joined a $35 million Series C round last year.
Investors in OpenDNS claimed that the startup’s valuation was approaching $1 billion, according to one source who was recruited by the firm.
OpenDNS’ core security offerings are built on big data and analytics gleaned from the company’s massive domain resolution infrastructure, which the firm claims sees 2 percent of all Internet traffic. Its cloud-based enterprise security service beat Cisco in blocking the ransomeware Cryptolocker by more than two months, OpenDNS CEO David Ulevitch told The Wall Street Journal last year.
The global market for cloud-based security services grew 13.5 percent last year and is expected to overtake the on-premises security market within three years, according to a recent report from Infonetics.
The acquisition, expected to close before Cisco’s first quarter ends in October, may come as special vindication for Ulevitch. He was bounced out of the CEO role by investors two years after founding the company, only to return to the top job in 2011, at age 29.
The OpenDNS team would merge into Cisco’s security business group under senior vice president David Goeckeler.