Cisco this week announced plans for a $135 million acquisition of Reactivity, a maker of XML gateway and security hardware designed to speed and secure up web services traffic on enterprise networks.

The move strengthens Cisco's application acceleration technology menu, with Reactivity's XML manager, gateway and firewall products - appliances designed to speed up processing of service-oriented architecture (SOA) application traffic, which uses bulky protocols such as XML and Simple Object Access Protocol.

The Reactivity gear will join Cisco's own Application Oriented Networking (AON) XML inspection products as part of the company's larger Application Network Services technology group.

Privately held Reactivity has 56 employees and was founded in 1998. Reactivity employees will report to Jayshree Ullal, senior vice president of Cisco's Datacenter Switching and Security Technology Group. The deal is expected to close in the third quarter of Cisco's fiscal year 2007, which ends in April. The Reactivity buy is Cisco's third acquisition this year.

Reactivity competes with independent XML and SOA acceleration vendors such as Layer 7 and Forum Systems, as well as DataPower, which was bought by IBM in 2005.

Reactivity's products secure SOA traffic with processors and software that offload from servers some of the formatting, protocol conversion, and other tasks involved with SOA-based application traffic. For example, the Reactivity Gateway would sit in a data centre with servers hosting SOA applications, and provide functions such as Web services authentication, validation of XML schema (specific Web services "dialects" used in various SOA deployments), and protection against XML-based attacks.

While Cisco's XML-based AON technology has not gained a lot of traction with customers, observers say the SOA networking market is still potentially lucrative. ZapThink, a research firm focused on enterprise SOA, predicts the market for XML optimisation technology will reach $1.2 billion by the end of the decade. The company also predicts that Web services traffic will make up around 48 percent of all enterprise traffic by next year.

"The AON platform movement hasn't yet resulted in as much market traction as originally supposed," says Ronald Schmelzer, senior analyst with ZapThink. "It's possible that this acquisition can give Cisco the kick in the pants it needs to effectively take advantage of a growing opportunity for management of XML and Web services traffic."