Datto's acquisition of cloud-based networking vendor Open Mesh arms its extensive network of MSPs with a new arsenal of managed networking services they can use to expand their own portfolios and displace offerings from Cisco Meraki and SonicWall, Datto channel partners said.

Norwalk, Conn.-based Datto, best known as a provider of disaster recovery and business continuity technology, Tuesday revealed it has branched out into the networking market with the purchase of Open Mesh and its portfolio of Ethernet switching and wireless access point technology. With the acquisition, which closed on December 31, Open Mesh has become a Datto subsidiary. Terms of the deal were not disclosed.

David Pence, CEO of Acumen IT, a Greenville, S.C.-based MSP and Datto channel partner, said the Open Mesh portfolio enables him to bring a whole new chunk of clients' infrastructure into the managed services fold.

"We're now looking at switching out clients' crappy networking gear," said Pence. "It's something companies do every three to five years, but now we can help them go from non-managed gear to managed gear ... We don't want to wait for the customer to complain to find an issue."

[Related: 10 Things You Need To Know About Datto's SMB Networking Land Grab And Its Acquisition of Open Mesh]

While Datto's disaster recovery and business continuity services and the Open Mesh offerings are aimed as SMBs, Pence said his company is planning to take them into larger companies with IT departments with up to 20 people.

The pricing for such as IaaS offering will be less than the annual Cisco Smart Net maintenance fees customers pay on top of the up-front cost of the Cisco Catalyst switches and their installation, Pence said.

"We're already talking to customers. They like how, if something dies, we change it out. Newer technology, we change it out. New antennas, we change it out. We just make it work. That's what people want to hear."

Frank Picarello, CEO of TeamLogic IT, a Mission Viejo, Calif.-based provider of managed services via a network of TeamLogic IT franchises around North America, told CRN Datto's MSP partners will have a real chance to displace competing networking solutions.

"Our managed clients care less about the brand of networking," Picarello said. "The Open Mesh solution set competes less with a particular company and more with a set of services levels our customers pay for. We expect to leverage the technology to change the market dynamics."

In their roles as technology advisors, Datto MSPs are perfectly positioned to introduce customers to the benefits of displacing unmanaged technology with Open Mesh gear built to be deployed as part of a complete managed services offering, Picarello said.

"When it's time to refresh, whether because the current technology is obsolete or the customer has outgrown it, we come in and say, 'Here's how we can help your environment,'" he said. "Most of our clients don't know what technology they have. They want to know what it will do for them."

The Open Mesh Ethernet switching and access point technologies, along with the existing Datto Networking Appliance, will now be known as the Datto Networking product line.

Datto Tuesday also unveiled general availability of its Datto Networking Appliance, or DNA, router. Introduced in mid-2015, the DNA router is an appliance that serves to protect data in transit between customers' data centers and MSPs' clouds. It includes router, Wi-Fi, firewall and 4G LTE connection in a single appliance that can be configured in the cloud to reduce manual visits to storage sites, and works with Verizon to provide 4G LTE failover in case of a disaster.

Datto executives said the company's expanded portfolio will help it take advantage of what they see as a major gap in the SMB networking market currently served by Cisco Meraki, SonicWall and Ubiquiti Networks.

Rob Rae, Datto's vice president of business development, claims Meraki has taken its eye off its SMB roots since it was acquired by Cisco four years ago.

"With Meraki getting acquired by Cisco, all of a sudden you are talking about a product that is not priced appropriately or even targeting the SMB market," he said. "There is a huge gap in the SMB technology needs versus the technology that is available at a reasonable price point. That is where we are looking at this as a huge opportunity."

Datto's heritage as an MSP powerhouse is going to be key to winning share against Cisco and others, said Rae. "This is a fantastic opportunity for both the channel and end users to get enterprise-class technology at an SMB price," he said.

In addition to Cisco Meraki, Datto executives identified Ubiquiti, a $700 million San Jose, Calif. wireless networking provider, as a "priority" target, alongside security and wireless vendor SonicWall, noting that security will be key focus for Datto going forward.

Open Mesh, a 28-employee company in Lake Oswego, Ore., already sells its hardware to MSPs at a low up-front price with a monthly recurring fee that gives MSPs the opportunity to price the service as they see fit, a model Datto plans to continue. Open Mesh's partner base includes 1,200 MSPs who have deployed about 300,000 access points, said Pete Rawlinson, Datto's Chief Marketing Officer.

The managed networking services market is three times bigger than the business disaster recovery market where Datto has a significant share, Rawlinson said. "This is a second product line we can cross-sell into our existing MSPs," he said. "We think it is going to be pretty significant for us."

Rawlinson declined to disclose Open Mesh's pricing to MSPs, but said that the recurring monthly fee includes a three-year warranty on the hardware and access to a unified cloud management portal covering the Datto and Open Mesh offerings, all without the need to sign a long-term contract.

Open Mesh currently offer three different switches, including models with eight, 24, and 48 ports, as well as two different wireless access points.

There are a lot of solutions providing security and Wi-Fi availability, but many of them are over-engineered for the small business, Rawlinson said.

"We go to the MSP and say, 'Look, you're looking to change your revenue stream from a project-based, single hardware purchase model to a more sustainable recurring revenue model, and you can bundle in services like security, for example,'" he said. "We enable [them] to do that. A one-stop shop where you can add to your BCDR (business continuity, disaster recovery) a single pane of glass management capability to our portal. Now you can add networking to it as well."

The addition of Open Mesh's networking technology to Datto's managed services offerings will lead to a major expansion of Datto's MSP partner business, said Scott West, Datto's senior product marketing manager.

"Every business has a network, and has networking products and devices in place," West said. "But the reality is, these devices tend to be switched out every three to four years as new standards and new features are added. The ability for MSPs to bring clients new technology that supports the latest protocols and technologies as new smart devices and PCs are deployed is a huge opportunity for them."

Datto and Open Mesh MSPs can rest assured the company will rely on its past experience to deliver its new Open Mesh services in a channel-friendly way.

"We are an extremely channel-friendly organization, and we've got an eight-year record of doing that with appropriately-priced products, innovative products, all designed for the SMB space," he said. "And that's where we're envisioning this as being a fantastic opportunity, not only for the channel, but for the end user."

Rae estimated that almost 100 percent of Datto's 5,000 global MSPs are also selling networking of some sort, making the company's new Open Mesh products and the Datto Networking Appliance an opportunity for its partners to expand their management services business.

"For them, [Datto is a] trusted brand and trusted partner," he said. "Open Mesh is a great company with a solid track record of good technology. There's probably some low-hanging fruit right out of the gate for us there."

Datto's Rawlinson said that adding managed networking services is a dejavu moment for the company.

"We built up the business disaster recovery market with MSPs and now we are doing the same thing again with networking," he said. "We are really pumped to go o the MSPs and say we are coming out with this networking solution. It may not do everything you want to do day-one, but let's go build it together and make some money at the same time. We are really excited."

Steven Burke contributed to this story.