Cisco-OpenDNS Deal Shows Importance of DNS in Security, Dyn CEO Says

Cisco is paying $635 million for privately held OpenDNS, a company founded in 2005 by David Ulevitch, to further build out its cloud-based security business. But the deal is also a sign of the times, according to a prominent player in Web infrastructure.

The purchase of San Francisco-based OpenDNS shows that there is still a transition happening between hardware and software in Internet traffic and security management, says Jeremy Hitchcock, the founder and CEO of Dyn, a Manchester, NH-based online infrastructure operator. Dyn also purchased a company founded by Ulevitch, called EveryDNS, in 2010 for an undisclosed amount.

The deal highlights the importance of the DNS layer, Hitchcock says. Standing for domain name system, DNS translates the URLs we see into Internet Protocol addresses that are needed to be read by Web servers and routers. It’s used to both optimize the speed of the Internet—Dyn’s focus—and to protect against cyber attacks like phishing and malware, which is the goal of OpenDNS.

“It’s the control plane of the Internet—you can build great products and companies on this foundation,” Hitchcock wrote in an e-mail. “Cisco will be able to leverage cloud based capabilities with OpenDNS. It’s a win for the industry and continued validation for us.”

Cisco was a minority investor in a $35 million funding round for OpenDNS last May, according to Reuters. The San Jose, CA-based networking company (NASDAQ: CSCO) has made other recent purchases in the online security field, including the $2.7 billion purchase of Sourcefire in 2013, malware analysis business ThreatGRID last year, and security advisory firm Neohapsis this year, Reuters says.

Gregory T. Huang contributed to this report.

David Holley is Xconomy's national correspondent based in Austin, TX. You can reach him at Follow @xconholley

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