Why consolidation is not happening in the application delivery market

Insightful analysis by consultants Steve Taylor and Jim Metzler, plus links to the latest WAN news headlines

This is the fourth and last in a series of newsletters that resulted from Jim's participation in a recent Network World chat on the topic of application performance management and WAN acceleration. This newsletter will deal with the question raised by one of the participants about the consolidation underway in the application delivery market and in particular, Blue Coat's acquisition of Packeteer.

The participant pointed to the acquisition as an indication that the market is consolidating. We don’t agree. We do agree, of course, that there have been, and likely will continue to be a number of acquisitions. However, application delivery is a different type of market than we normally see. For example, in the mid 1990s there was more than a dozen start-up LAN switching vendors whose products had some minor differences. Early on intense debates were waged over what now seems like trivial differences, such as the relative merits of cut through vs. store and forward switching. In the late 1990s and early 2000s, LAN switches started to become commodities. A similar phenomenon occurred more recently with wireless access points.

Based on markets such as LAN switching and Wi-Fi access points, it would be easy to assume that all technology markets go through a period of rapid growth based on the emergence of start-ups with competing approaches, and that this period is followed by one of consolidation based on the acquisition of some of the start-ups as well as on the commoditization of the relevant products.

To continue reading, register here and become an Insider. You'll get free access to premium content from CIO, Computerworld, CSO, InfoWorld, and Network World. See more Insider content or sign in.

This is the fourth and last in a series of newsletters that resulted from Jim's participation in a recent Network World chat on the topic of application performance management and WAN acceleration. This newsletter will deal with the question raised by one of the participants about the consolidation underway in the application delivery market and in particular, Blue Coat's acquisition of Packeteer.

The participant pointed to the acquisition as an indication that the market is consolidating. We don’t agree. We do agree, of course, that there have been, and likely will continue to be a number of acquisitions. However, application delivery is a different type of market than we normally see. For example, in the mid 1990s there was more than a dozen start-up LAN switching vendors whose products had some minor differences. Early on intense debates were waged over what now seems like trivial differences, such as the relative merits of cut through vs. store and forward switching. In the late 1990s and early 2000s, LAN switches started to become commodities. A similar phenomenon occurred more recently with wireless access points.

Based on markets such as LAN switching and Wi-Fi access points, it would be easy to assume that all technology markets go through a period of rapid growth based on the emergence of start-ups with competing approaches, and that this period is followed by one of consolidation based on the acquisition of some of the start-ups as well as on the commoditization of the relevant products.

The reason that we don’t think that the application delivery market will follow the same path as the LAN switching and access point markets is that the key vendors in the application delivery market entered the sector from differing vantage points and have different strategic directions. As such, their products will not become a commodity anytime soon.

For example, Cisco entered the application delivery market as the dominant enterprise networking vendor and often advocates how its products do the best job of integrating with the rest of the IT infrastructure. Similar to Cisco, Juniper advocates the viability of integrating WAN optimization into the router. Juniper is also likely to begin to discuss more heavily the importance of linking WAN optimization and security. Neither Riverbed, F5 or Citrix are enterprise networking companies and advocate an approach to application delivery that is based on stand-alone appliances. Citrix has a wide range of application delivery solutions that began with XenApp, formerly Citrix Presentation Server. Unlike Cisco, F5 and Citrix, Riverbed does not offer an application delivery controller. Recent announcements make it clear that Riverbed intends to expand its role in the storage market by modifying some of its WAN optimization techniques to better apply to storage. As noted, F5 is not in the enterprise networking market. When asked about its uniqueness in the market, F5 often responds that it has a deep understanding of applications such as SharePoint and SAP. Earlier this year F5 gave some indication of its future direction when it acquired Acopia – a leader in the file virtualization market.

Steve Taylor is president of Distributed Networking Associates and publisher/editor-in-chief of Webtorials. Jim Metzler is vice president of Ashton, Metzler & Associates.