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Riverbed just another has-been competitor to Cisco

By Brad Reese on Mon, 04/07/08 - 5:35am.

Riverbed vs. Cisco

Former tough wide-area data service competitor Riverbed Technologies appears to have become nothing more than a has-been competitor, tasked with keeping Cisco on its toes while struggling to remain relevant as a niche player.

Late last Thursday after the stock market closed, an embarrassed Riverbed management hastily arranged a Wall Street conference call (read the call transcript), to inform investors that Riverbed revenue would fall short of previous expectations for the first quarter.

By the next day Friday, Riverbed stock had taken a 12% dive in price. Keep in mind that back on October 17th 2007, Riverbed stock hit a high of $52.81 per share. So in just the past 6 months alone, Riverbed has lost 75% of its stock market value (quite a haircut for Riverbed investors).

Cisco (CSCO) vs. Riverbed (RVBD) Stock Chart Comparison:

Cisco vs. Riverbed Stock Chart Comparison

During the conference call, Ryan Hutchinson with Lazard Capital Markets brought up that it looks like Cisco is starting to gain some share.

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.

Flabbergasted by Riverbed in their conference call bemoaning lengthening sales cycles, enterprise softness and CFO fear, Douglas Gourlay - Senior Director Marketing and Product Management for the Cisco Data Center Business Unit, asked two pertinent questions of Riverbed in his recent Cisco Data Center blog entry:

Longer Sales Cycles in WAN Optimization

Douglas Gourlay1. While you used to claim 98% win rate and no competition, could the equality in market share really be more an indication that you are simply not seeing all the opportunity and be a sales coverage issue, or simply that there is now a more superior product and solution in the market?

2. Or was the 98% just bluster and hype designed to pump up the volume so to speak?

Why do YOU think Riverbed management failed to acknowledge Cisco's market share gains during their conference call to explain Riverbed's First Quarter revenue shortfall?

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