Last week, Brocade announced its intent to purchase the SteelApp product line from Riverbed for an undisclosed amount of cash. SteelApp is a virtual application delivery controller and competes most often with the likes of F5 and Citrix. Formerly known as Stingray, SteelApp came to Riverbed in the acquisition of UK-based Zeus, who pioneered the virtual ADC market. On paper, the acquisition made sense for Riverbed, as Zeus had solutions that optimized the performance of applications with a data center solution and Riverbed was a vendor that optimizes application performance over the wide area network.
However, although the business unit had some early success when it was dropped into the Riverbed channel, it never really became a meaningful part of Riverbed's revenue stream. Now, after almost four years, SteelApp will become part of Brocade's business.
While the deal conceptually made sense, in retrospect, ADCs and WAN optimization tools really don't have much synergy with one another. Taking a look back, a number of vendors have tried to make the case that buying ADCs and WAN optimization from a single vendor would create some kind of solution that could optimize traffic from the core of the network to the edge. Juniper, Cisco, Citrix, F5, and Riverbed all tried, and none of them really made it matter. One possibility could be that none of them could figure out the go-to-market with both. Occam's Razor would suggest that there just isn't any reason to have both solutions come from one vendor.
I look at this as a win-win for both companies, as well as the SteelApp customer base. For Riverbed, the sale of SteelApp follows the $80 million sale of SteelStore to NetApp last October. The sale of both SteelApp and SteelStore should allow Riverbed to focus on what it's really good at, and that's finding and fixing WAN issues. SteelApp and SteelStore are great products, but they live in the data center and Riverbed has had its best success in the WAN and, in my opinion, that's where Riverbed should direct its energy.
In January, I was invited to be a keynote speaker at Riverbed's sales kickoff in Las Vegas, and I had a chance to catch up with the company's CEO, Jerry Kennelly, backstage. He and I discussed at length how the cloud is creating disruption in the network and businesses are starting to shift the WAN to hybrid/software defined WANs effectively becoming hybrid enterprises. Make no mistake – Riverbed has some great WAN products, including its industry-leading optimizer SteelHead and SteelCentral management tools. The evolving WAN, combined with the shedding of data center assets, will enable Riverbed to focus on providing great solutions that give its customers the visibility, optimization, and control of hybrid environments to ensure that both on-premise and cloud-based applications perform optimally.
There's arguably no company that understands data center networking better than Brocade. While the company has a line of ADCs today with ADX, the virtual version doesn't have the range of features or the product maturity of SteelApp. Brocade has been one of the most aggressive vendors with regards to network functions virtualization (NFV) as well as SDNs. The virtual ADC from SteelApp nicely complements the Vyatta product portfolio that includes routing, firewalls, and other security functions. The virtual ADC will be the fastest-growing segment of that market, so the acquisition is well-timed for Brocade.
Being a Star Trek fan, I remember in the movie "Search for Spock" when Spock said to Kirk that being captain of a starship was his "first best destiny." I believe the WAN and data center are the first best destinies of both Riverbed and Brocade, respectively. Look for both companies to benefit from the sale of SteelApp.