Cisco moves up the protocol stack, calls the application layer home.

In a move that further erases that fine line between the traditional networking equipment company and the traditional networking software company, Cisco made two acquisitions in application layer companies this month.

The first in the XML application services space when it acquired  Reactivity, which has appliances that enable customers to efficiently deploy, secure and accelerate XML and Web services. (Other startups to watch in this space are : Xambala,  Layer 7 Technologies,  and Forum Systems to name a few.)

Reactivity's appliances work at the application layer and perform functions such as XML firewalling, XML schema validation, transformation, and cryptographic operations.  All that with a big performance gain. 

Cisco sees an expansion of XML and SOAP based web services in the enterprise, and it considers the segment and important part of its Service-Oriented Network Architecture (SONA) strategy. 

"Customers continue to validate our on-going strategy of building more application services on the network platform," said Jayshree Ullal, Senior Vice President, Datacenter Switching and Security Technology Group (DSSTG). "Reactivity together with our Application Control Engine (ACE) provides a highly capable solution for customers' application delivery needs in the data center."

The Application Control Engine he speaks of is Cisco's offering in the Application Infrastructure space. It provides IT with a centralized control over the deployment and management of application service and allows individual groups to administer their own application instances.

Proving that it continues to be one step ahead of the game, Cisco followed that investment with an acquisition of a San Francisco-based social networking platform maker called Five Across Inc.

Why?

The official word is that Cisco wants to help its customers use their network as a platform for organizations and individuals to connect with each other.  

"Cisco believes the network is the platform for organizations to connect with their constituents and for individuals to connect with each other," said Dan Scheinman, senior vice president and general manager of the Cisco Media Solutions Group (CMSG). "With the acquisition of Five Across, Cisco is taking an important step towards helping its customers evolve their website experience into something more relevant and valuable to the end-user."

Sounds like a piece of a much larger strategy that we will no doubt see more of in coming months. 

Acquisitions

Also this month, communications major Ericsson acquired VC funded Entrisphere, getting its IP based broadband access platform for connecting to optical networks. The acquisition strengthens Ericsson's fixed broadband access portfolio and its position in converged networks. Entrisphere was founded in 2000 in Santa Clara and employs about 140 people. 

Elsewhere on the web,  PE Wire reports that Nasdaq listed Brightpoint acquired Denmark-based Dangaard Telecom, a distributor of mobile products, for approximately $300 million in Brightpoint stock. 

Logica CMG spun off it's telecom products business to PE firm Atlantic Bridge Ventures, who subsequently named the new company Acision.

ViaSat acquired Intelligent Compression Technologies, makers of network accelerators for GPRS, 3G, dial up acceleration and satellite networks, for $20M in cash and stock. 

ICT provides corporations, internet service providers (ISPs), and satellite/wireless carriers with patented data compression techniques, advanced transport protocols, and application optimization to substantially increase the speeds of either narrowband or broadband terrestrial, wireless, or satellite services.

Funding

Yet another wireless mesh networking company, Strix Systems, received funding from Samsung Ventures America. Strix joins Whisher and others in the wireless mesh router space.

Other networking companies in the funding news this month included:

Sequans Communications (WiMAX semiconductor solutions)

CarrierIQ (wireless diagnostics)

SmartSynch (wireless smart meters)

IP.access ( a UK-based provider of cellular picocell technologies)

Sirific Wireless ( fabless provider of single-chip, multi-band CMOS RF transceivers for the 3.5G market)

Everyday Wireless (GPS tracking services for vehicles)

Sensory Networks (network security acceleration) 

BA Systems ( enterprise networking solutions )

Bomgar (appliance-based remote support software)

Grid-X ( low cost 100 GigE offload engine )

BPL Global ( utility services, delving into broadband over power lines )

CoADna Photonics ( fiber-optic solutions for DWDM optical networks)

Mino (mobile software that hooks up to the Skype network)

Visto (Mobile email)