Advice to App Optimization Vendors - Cater to Carriers

Last week we talked about how carriers are achieving success with their managed ADS services. Here are some numbers to bolster the assertion that enterprises are starting to buy ADS capabilities as a service. Orange Business Services has nearly 300 multinational customers using its Business Acceleration services, managing over 10,000 devices. This translates into service revenues upwards of $50 million, and Orange predicts a 30-40% sales growth for these services over the next 2 years. Vanco has incorporated its newly minted Application Aware Networking service into 80 percent of new VPN contracts.

But in frequent discussions with carriers over the past year, we have heard a consistent complaint. Most leading ADS vendors design products for enterprises, not for carriers. Today's lineup of optimization products designed for enterprise environments do not give carriers the complete set of features they need. In particular, carriers need more complete reporting, and the ability to manage services across many customers.

During the communication sector carnage of the early 2000's many vendors were spooked from carrier waters to swim exclusively with enterprises. Although a sensible short term move, vendors who continue to ignore the needs of carriers do so at their own peril. It is clear that as managed application performance services go main stream, network service providers will buy a growing percentage of distributed ADS products.

For a little while, the major ADS vendors can count on the fact that enterprises will push carriers to build services around enterprise products blessed enough to appear in the upper right hand square of Gartner's Magic Quadrant. In the next two years, however, we predict that press and analyst chatter about ADS products will subside and products will increasingly resemble each other. When this happens, customers will become amenable to carriers choosing best-of-breed solutions designed for service provider use. This should winnow the field to two or three vendors, and those vendors may not be today's darlings.

Of the distributed ADS products the service providers are using today, only Ipanema's platform is purpose-built for service providers. Six of the eight service providers we know of with standard distributed ADS services use Ipanema. Most enterprises haven't heard of Ipanema, and for now that means that the carriers must offer other services based on products enterprises recognize but don't meet carriers' needs.

We see opportunity for innovators like Ipanema, and a market newcomer from Australia named Exinda who also has designed its products with service providers in mind. Although none of the service providers we have interviewed has yet deployed it, we believe Exinda is a vendor to watch.