Cisco Systems announced a definitive agreement to acquire privately-held Topspin Communications Inc. of Mountain View, Calif. Topspin is a provider of server fabric switches, a new class of server networking equipment, providing a high performance, programmable infrastructure for Grid and utility computing, clustered enterprise applications and server virtualization. Server fabric switches are designed to connect servers together into a Grid, and then provide network and storage connectivity to that server Grid.

This acquisition strengthens Cisco's ability to provide customers with specialized networking technology and services to allow them to build their data centers in a flexible, Grid-like fashion. The Topspin product line will extend Cisco's data center switching solutions to include InfiniBand-based server switching and will complement Cisco's existing network switching and storage switching solutions including its Ethernet-based Catalyst switching platform for internet/intranet infrastructure and its multiprotocol (Fibre Channel, FCIP, iSCSI and FICON) MDS switches for storage area networks.

Under the terms of the agreement, Cisco will pay approximately $250 million in cash and options for Topspin. The acquisition is subject to various standard closing conditions, including applicable regulatory approvals, and is expected to close in the fourth quarter of Cisco's fiscal year 2005 ending July 30.

"The widespread adoption of server architectures such as blades, Grid computing and clustered applications is driving an emerging market opportunity within the data center. As our customers build out these new computing environments, it is important that we deliver server networking technologies to fit their needs. By adding Topspin's server fabric switches and virtualization software, alongside our industry leading portfolio of Ethernet and SAN switches we are able to offer our customers compelling end-to-end data center switching capabilities," said Luca Cafiero, senior vice president of the Data Center, Switching and Wireless Technology Group at Cisco Systems.

Topspin products are targeted at data centers where customers are deploying high performance Grid and utility computing, clustered enterprise applications and/or server virtualization. These customers include enterprises, service providers, research institutions and universities, with mission critical applications that are computational and data intensive and require high availability and manageability from the underlying infrastructure. Topspin's technology delivers a compelling return to its customers on their IT investment dollars by improving price/performance, promoting resource flexibility, and dramatically reducing equipment and management costs.

This acquisition and the introduction of InfiniBand technology into Cisco's portfolio offers customers another way to meet their application networking needs. Several major server vendors have announced support for InfiniBand technology as part of their clustering and/or Grid solutions for both their standard and blade server solutions. Specifically, Dell, HP, IBM, NEC and Sun have all announced relationships with Topspin to provide InfiniBand-based server fabric switching as part of their portfolios.

Upon close of the transaction, Topspin will join Cisco's Data Center, Switching and Wireless Technology Group. Topspin was founded in April 2000 and has approximately 135 employees in Mountain View, Calif. and Bangalore, India.