Cisco To Acquire XML Gateway Provider Reactivity

Cisco Systems on Wednesday said it has agreed to acquire XML gateway provider Reactivity for $135 million in cash, a move that would fill a hole in the network equipment maker's platform for managing applications within a data center.

Cisco expects to complete the transaction by April 28, the end of the third quarter of its 2007 fiscal year. Following the purchase, Cisco plans to incorporate Reactivity's XML gateway technology into its Application Control Engine, a software module within the Cisco Catalyst 6500 Series switch. ACE provides application scalability, security, and acceleration within a data center.

Reactivity's gateway appliance is found in data centers where XML and Web services standards are used for communications between applications. The product lets companies accelerate routing, authentication, authorization, and security of XML messaging, while also centralizing integration and policy enforcement.

"Reactivity adds robust security and policy management capabilities to the Cisco platform where it was sorely lacking," Ronald Schmelzer, analyst for ZapThink, said in an email. Cisco's application management platform hasn't received the market traction as originally expected, so "it's possible that this acquisition can give Cisco the kick in the pants it needs to effectively take advantage of a growing opportunity for management of XML and Web services traffic."

XML and Web services are key technologies for building service-oriented architectures, a form of distributed computing that provides more flexible application integration than older methods. The growing customer demand for SOA tools has led to a significant consolidation in the market, with large vendors buying pioneering smaller companies, Schmelzer said. Examples include IBM buying DataPower, Intel acquiring Sarvega and Conformative, and now Cisco gobbling up Reactivity.

Despite the ongoing consolidation, there are still startups "making waves in the market," Schmelzer said. They include Forum Systems, Layer 7 Technologies, Tarari, and Xambalad.

Privately held Reactivity, founded in 1998, has 56 employees.