Close Ties: Originally founded in Sunnyvale in 2012 as Storvisor by storage engineers from VMware, Springpath launched three years later in 2015, the same year Cisco led Springpath’s $34M series C funding round. Both companies worked to co-engineer Cisco’s HyperFlex HX Data Platform, a software-defined storage technology system that runs on Cisco’s Unified Computing System (UCS) servers. As Cisco had already owned an undisclosed stake in the company, acquisition rumors began as early as August 2016.

Maturing Market: In the highly competitive hyperconverged infrastructure (HCI) market, which stands at ~$1.5B, companies like Nutanix, HPE SimpliVity, Dell VxRail and VxRack have seen robust growth. Previously, Cisco attempted to acquire Nutanix and SimpliVity, but both deals fell through — competitor HPE announced its deal to acquire SimpliVity in January for $650M. Now, the strategic Springpath acquisition will help Cisco increase its presence in the maturing HCI market, which will reach $6B by 2020 according to research by IDC.

Competitive Boost: For Cisco, the market is still relatively new — the company has around 1,800 HyperFlex customers, which is small in comparison to the size of its customer base. In addition, as competitors are innovating their software rapidly, Cisco must also develop higher speed and quality of deployment to remain competitive. The Springpath acquisition will help Cisco’s Data Center unit, which has already seen customer demand shift from UCS to HCI — according to Cisco’s last earnings report, the UCS/Data Center business saw a decline of 4%.

Software Focus: As the cloud continues to grow in demand all across the board, Cisco’s series of acquisitions will help the company transition into becoming more software-centric — Cisco completed the purchase of business software company AppDynamics for $3.7B in March and also completed the purchase of software-defined wide area network (SD-WAN) vendor Viptela for $610M earlier this month.