Networking equipment giant Cisco on Wednesday said it agreed to acquire Linux-based email server and calendaring company PostPath for $215 million.

Mountain View, California-based PostPath would become Cisco's fifteenth acquisition in less than two years and its eleventh software application and services company.

San Jose, California-based Cisco has bought its way into a number of application software-dominated markets, including cloud computing, social networking, collaboration, and now email.

With cloud computing and social networking blurring the lines between networking hardware, application software, and services, a number of traditional IT gear companies led by Cisco have moved into the software application business.

And for good reason: The emergence of cloud computing is changing the economics of networking hardware and software markets, according to analysts.

Cloud computing is corporate computing that does not reside at users' premises. Instead the computing resources are owned and managed by a service provider and businesses access the resources via the Internet.

Customers pay only for the level of service they need so they can dial up or dial down the service level based on the current needs of their businesses. So where companies once bought hardware devices, they are now paying just for services.

“Cisco can continue to be a successful networking hardware firm, but if they want to continue the kind of growth they've experienced in the past they've got to start looking outside their original comfort zone,” said Charles King, principal analyst with Pund-IT Research.

PostPath markets Linux-based email servers that are compatible with Microsoft Exchange but cost less than Exchange servers, and the company claims its servers reduce users' dependence on Microsoft's sometimes erratic upgrade cycles.

Cisco will add PostPath's email server and calendaring technology to its package of on-demand collaboration services it acquired when it bought WebEx 18 months ago.

“We are believers in the cloud-based delivery model for certain types of services in particular inter-company collaboration services, and that is why we got WebEx and now PostPath,” said Charles Carmel, Cisco's vice president of corporate development.

Cisco is not alone. In the last month both AT&T and Verizon, the two largest telecom carriers in the United States, have said they are entering the cloud computing market.

“Cloud computing is changing the economics of the networking market, and networking firms such as Cisco, AT&T, and Verizon must adapt,” Mr. King said.

Five-year-old PostPath has taken about $30 million in funding from JAFCO Ventures, Matrix Partners, and Worldview Technology Partner.