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WAN optimization market winners? 1 Cisco 2 Blue Coat 3 Riverbed

Matthias Machowinski - Infonetics Research analyst, "In 2008, the WAN optimization appliance market crossed the $1 billion mark for the first time, increasing 29% from the previous year--impressive results for a year in which the world's economies slowed and many related networking segments struggled." According to the Infonetics 4Q08 WAN optimization report, the WAN optimization vendors below are ranked for the quarter and the year by worldwide revenue: 1. Cisco 2. Blue Coat 3. Riverbed This new order of the WAN optimization vendor rankings is not surprising to yours truly as almost a year ago I blogged: Riverbed just another has-been competitor to Cisco It's my personal opinion that you can't be a milquetoast and hope to successfully compete against Cisco. Why? As I specifically noted earlier in my April 2008 blog:

"Riverbed CEO - Jerry Kennelly admitted that competitively it has become a 3 horse race, it is Riverbed, Cisco and Juniper. Blue Coat is not in the top three, by Kennelly's metrics. "However most surprisingly, Kennelly insisted that the competitive landscape had not changed. "Cisco revealed on April 4th that according to a recent analyst report, Cisco currently has a 20.0% market share versus a 20.2% market share for Riverbed."

Perhaps Jerry will now admit that the competitive landscape has changed.

Update from Cisco: Received the following email message from Mark Weiner - Cisco Director of Data Center Marketing: "Hello Brad, I felt compelled to post on our own DC blog and highlight yours. It's been an amusing and day-to-day challenge the last couple years bringing this product family to market, growing it, and making sure buyers have the honest info on hand vs. some FUD-driven competitors. Your observations will be a key milestone in that effort for awhile to come." Mark continued in his Cisco blog post:

"I invite Riverbed and other FUD-heavy vendors to change their approach in this increasingly tough economy. IT teams and buyers need honest, accurate information about vendors and their solutions, given their purchase decisions in times of minimized Capex and ever reducing Opex are critical for their companies, as well as their careers. Focus on key things like business models, return on investment, and productivity benefits to employees and IT staff."

Update on Riverbed: Quotes from Riverbed CEO - Jerry Kennelly published the day after this blog story:

As for its big-name rival, Kennelly admits that Cisco is a "fierce" competitor with great brand recognition but says that he is not afraid of the networking behemoth. "We don't compete with them in their strength, which is layer two to three [switching and routing]," he said, explaining that Riverbed is focused on layer four to seven applications such as email and file transfers.

It appears to yours truly that even though Riverbed is now ranked #3 behind Cisco and Blue Coat in WAN optimization revenue, its CEO still believes Riverbed has nothing to fear because it doesn't compete with Cisco in layer two to three. Am I the only one perplexed by Jerry's logic? Cisco's response to Jerry's logic:

You're not the only one who's perplexed with Jerry's thinking...Couple thoughts: 1. "layer four to seven applications such as email and file transfers" -- Wasn't aware that there were "layer four applications", but rather that Layer 7 was "the application layer" of OSI stack...? Certainly optimization for the use cases he mentioned are primarily Layer 7 (i.e. CIFS, MAPI protocol optimization). 2. More importantly, we at Cisco don't "divorce" Layer 2/3 network infrastructure interoperability from higher layer technologies like WAN optimization. Rather, we've done the opposite with tight, carefully crafted integration with router software (IOS, WCCP) and related IP layer 2-4 services (QoS, firewall, IPS, etc.) --- something we called "transparency" when we launched in Fall 2006. And something they copied in their datasheets over last 12 months. If you have any better insight than we do, thanks for sharing...

Further thoughts from Cisco:

Many Cisco customers would also agree with your perplexity re: "CEO still believes Riverbed has nothing to fear because it doesn't compete with Cisco in layer two to three". An interesting data point for that: Over 50% of Cisco WAN optimization deployments (into branch office sites) have been with the router module version of WAAS. Customers repeatedly tell us they like the simple integration into the router footprint, as well as the lower TCO (given that WAAS support cost is covered via router support license).

Related story: Cisco expands its SMB router market share but loses ground in high-end segment


What's your take on why Cisco now commands the #1 revenue share in WAN optimization? BradReese.Com Cisco Refurbished Contact: Brad Reese Twitter: http://twitter.com/BradReese Call Toll Free 866-864-0506 or International 850-364-4115

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