Cisco acquires Epsagon for US$500 million to strengthen its application monitoring product portfolio

Cisco announced on Friday that it will acquire the Israeli application monitoring startup Epsagon for $500 million. The acquisition provides a more modern microservice-centric component for Cisco's growing application monitoring product portfolio.

The Israeli business publication Globes reported that it had obtained confirmation from Cisco that the price of the transaction was US$500 million, but Cisco did not confirm the price to TechCrunch.

The acquisition is based on several other high-profile application monitoring transactions, including AppDynamics, which was acquired by the company for $3.7 billion in 2018, and Qianyan, which was acquired for $1 billion last year.

With Epsagon, the company is gaining a way to monitor more modern applications built with containers and Kubernetes. Epsagon's value proposition is a solution built from the ground up to monitor these types of workloads and provide users with tracking and metrics. Given the short-lived nature of containers, this is not always easy to do.

As Cisco's Liz Centoni wrote in the blog post announcing the deal, Epsagon added the company's full-stack product concept to its application monitoring product portfolio. Rather than equip a bunch of different application monitoring tools for different tasks, the company envisions a tool that can work together.

"Cisco’s approach to full-stack observability enables our customers to shift from monitoring to providing examples of shared context between teams, and enables our customers to provide a superior digital experience, optimize cost, security, and performance, and maximize Maximize revenue from digital businesses," Sentoni wrote.

This point of experience is particularly important because it does not happen in a vacuum when the application is not working. It has a chain effect on the entire company, may affect the core business itself, and will definitely cause customer distress, which may put pressure on customer service to deal with on-site complaints and the website reliability team to solve problems. In the worst case, this can lead to loss of customers and damage to reputation.

If the application monitoring system can be used as an early warning system, it can help prevent the site or application from failing in the first place, and when it does fail, it can help track the root cause to make it up and running faster.

The challenge for Cisco is to integrate Epsagon into the existing components of the application monitoring product portfolio and provide a unified monitoring experience without making people feel like Frankenstein’s monster, integrating various parts into Solutions together.

Epsagon was launched in 2018 and has raised $30 million. According to a report by the Israeli publication Calcalist, the company is about to conduct a Series B financing when it accepts the offer, with a valuation of about US$200 million. It certainly seems to have brought handsome returns to its early investors. The transaction is expected to be completed later this year