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Networking giant Cisco has acquired Tidal Software, a Palo Alto, Calif. company that will enable Cisco’s customers to manage their key applications more seamlessly over Cisco’s network. It paid $105 million in cash and retention-based incentives.

Tidal, a company that raised at least $16.5 million beginning 11 years ago from investors like J.P. Morgan Partners, Novus Ventures and VantagePoint Venture Partners, focuses on letting companies efficiently manage and automate their applications. Cisco says it wants to integrate the Tidal offering into its Unified Computing System, announced last month, which brings together servers, storage and networking into a single offering, with an emphasis on virtualization. (Not surprisingly, the company’s move into the data center market prompted some criticism from incumbents, particularly around the idea that Cisco locks customers into an all-Cisco solution.)

So what does Tidal bring to the table? Cisco vice president of corporate development Hilton Romanski says Tidal gives companies visibility into how computing resources are being used by business applications. That information can then be used to automate the management of those applications.

For example, if a company wants to prioritize a payroll application that’s cutting checks for all its employees, Tidal’s solution lets the team know how much of the data center’s resources are being used by the payroll app compared to others, and, if desired, it can throttle back other processes to free more resources for payroll. Tidal already has more than 600 customers, and these features are an obvious plus for Cisco’s data center efforts.

Cisco says the deal should close during the fourth quarter of its fiscal year 2009 (basically in late spring or early summer of this year). Romanski points to the deal as exemplifying Cisco’s strategy to combine internal innovation, partnerships and acquisitions to accelerate its growth in selected markets despite the economic downturn.

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