Product Line Strategy Network Recorder and Traffic Visibility Market: A Case Study

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1 2013 Frost & Sullivan 1 We Accelerate Growth

2 Product Line Strategy Award Network Recorder and Traffic Visibility Global, 2013 Frost & Sullivan s Global Research Platform Frost & Sullivan is in its 50th year in business with a global research organization of 1,800 analysts and consultants who monitor more than 300 industries and 250,000 companies. The company s research philosophy originates with the CEO s 360-Degree Perspective, which serves as the foundation of its TEAM Research methodology. This unique approach enables us to determine how best-in-class companies worldwide manage growth, innovation and leadership. Based on the findings of this Best Practices research, Frost & Sullivan is proud to present the 2013 Global Product Line Strategy Award in Network Recorder and Traffic Visibility Market to Emulex for its Endace product line. Significance of the Product Line Strategy Award Key Industry Challenges Addressed by Product Line Strategy With the increase in complexity of the network and adoption of cloud-based services, the traditional tools used for network monitoring do not provide the visibility and 100 percent accuracy required for operational teams to effectively troubleshoot, diagnose and establish the true root cause of problems, particularly at high line rates. One of the reasons networks are becoming more flexible and scalable is the use of software defined networking (SDN) and the convergence of storage, traditional networking and clustering traffic; however, this flexibility can introduce complexity. Products such as EndaceProbe provide the next generation of networking services required to keep networks and applications running smoothly by delivering the scalability and flexibility required to provide the guaranteed level of service via service level agreements (SLAs) service providers need to constantly monitor the network and allocate resources so that applications can respond properly to peaks in load. There is a need in the market for solutions that are capable of handling discrete traffic types and filter the data that is sent to the monitoring solutions. Key Benchmarking Criteria for Product Line Strategy Award For the Product Line Strategy Award, the following criteria were used to benchmark the Emulex line of Endace products performance against key competitors: 2013 Frost & Sullivan 2 We Accelerate Growth

3 Breadth of Product Line Size of Addressable Customer Base Impact on Customer Value Impact on Market Share Breadth of Applications/Markets Served Decision Support Matrix and Measurement Criteria To support its evaluation of best practices across multiple business performance categories, Frost & Sullivan employs a customized Decision Support Matrix (DSM). The DSM is an analytical tool that compares companies performance relative to each other with an integration of quantitative and qualitative metrics. The DSM features criteria unique to each Award category and ranks importance by assigning weights to each criterion. The relative weighting reflects current market conditions and illustrates the associated importance of each criterion according to Frost & Sullivan. Fundamentally, each DSM is distinct for each market and Award category. The DSM allows our research and consulting teams to objectively analyze each company's performance on each criterion relative to its top competitors and assign performance ratings on that basis. The DSM follows a 10-point scale that allows for nuances in performance evaluation; ratings guidelines shown in this Chart. Performance-Based Ratings for Decision Support Matrix This exercise encompasses all criteria, leading to a weighted average ranking of each company. Researchers can then easily identify the company with the highest ranking. As a final step, the research team confirms the veracity of the model by ensuring that small changes to the ratings for a specific criterion do not lead to a significant change in the overall relative rankings of the companies Frost & Sullivan 3 We Accelerate Growth

4 Breadth of Product Line Size of Addressable Customer Base Impact on Customer Value Impact on Market Share Breadth of Applications/Markets Served Weighted Rating BEST PRACTICES RESEARCH Frost & Sullivan s 10-Step Process for Identifying Award Recipients Best Practice Award Analysis for Endace The Decision Support Matrix, shown in the Chart below, illustrates the relative importance of each criterion for the Product Line Strategy Award and the ratings for each company under evaluation. To remain unbiased while also protecting the interests of the other organizations reviewed, we have chosen to refer to the other key players as Competitor 1 and Competitor 2. Decision Support Matrix for Product Line Strategy Award Measurement of 1 10 (1 = lowest; 10 = highest) Award Criteria Relative Weight (%) 20% 20% 20% 20% 20% 100% Endace Competitor Competitor Frost & Sullivan 4 We Accelerate Growth

5 Criterion 1: Breadth of Product Line As one of the industry-leading network recording and traffic visibility solutions providers, the Emulex Endace product line has been deployed in some of the largest organizations across the world for more than ten years. With the increase in the adoption of new technologies such as cloud, telepresence and other web 2.0 applications, the IT and business environment is constantly changing and the network continues to become complex. Today, the performance of the network, underlying infrastructure and web applications play a critical role in the day to day business operations. Organizations are starting to realize the importance of monitoring and recording network traffic for key performance indicators (KPIs) and gaining increased visibility into the network. It is important to monitor the network for bottlenecks, roadblocks, and other performanceimpacting problems before they impact the end-users. The Emulex Endace product line's range of monitoring and visibility tools consists of Intelligent Network Recording appliances (EndaceProbe), Network Visibility Headend Systems (EndaceAccess) and NetFlow Generators that enable its customers to proactively and accurately monitor the network for faults and security issues. EndaceProbe appliances are designed to capture, index and record network traffic irrespective of the network speed and traffic type. Easily searchable network history helps IT teams and network engineers troubleshoot the network and applications for performance issues. EndaceProbe appliances are compatible with third-party applications and provide an option to forward network traffic to third-party network monitoring or security tools. EndaceProbe Intelligent Network Recorders are available in different specifications, popularly identified as the EndaceProbe 300, 3000 and 7000 Series. Depending upon the storage requirements and number of ports, customers can stack multiple units of EndaceProbe to match their network configuration. For example, the 7000 series provides 3 rack units consisting of 16x 1GbE ports and 4x 10GbE or 8X 10GbE ports, along with 64TB of local storage. It is also packed with Endace Operating System for Monitoring (OSm) software, a commercial deep packet inspective (DPI) engine that enables end-users to filter and visualize traffic based on application type and network speeds. On the other hand, EndaceAccess Network Visibility Headend Systems provide network administrators with traffic visibility on 40 and 100GbE network segments. As organizations continue to upgrade their network from 10GbE to 40GbE and 100GbE in the future, there is an increase in complexity and need to monitor the network more effectively. The EndaceAccess line of Headend Systems provides accurate traffic feeds to third-party tools and is compatible with any 10 Gbps-capable network monitoring or security solution. EndaceAccess Systems support both LAN and WAN protocols and are designed to be deployed in a wide range of network environments including data center builds and highspeed WAN deployments. EndaceVision is a web-based network traffic search engine specifically designed to work with EndaceProbe and EndaceAccess to help customers identify and extract network traffic of interest. Through EndaceVision, customers can visualize, prioritize, store and retrieve the captured traffic data from anywhere across the world. Apart from providing visibility into 2013 Frost & Sullivan 5 We Accelerate Growth

6 network traffic, EndaceVision also provides engineers with a real-time reporting on bandwidth utilizations and accurate information on end-user behavior. Criterion 2: Size of Addressable Customer Base Prior to the Emulex acquisition of Endace, the company had been operating successfully in the global network recorder and traffic visibility solutions market for the last ten years. Endace started off as a research project at the University of Waikato, New Zealand, and over the years, expanded its presence with regional offices in North America and Europe. Today, Endace products have a rich customer base worldwide, including three of the top five telcos in the U.S. and four of the top 10 Fortune 500 companies. Endace solutions enable operators to perform efficient troubleshooting and provide them with a deep understanding of network behavior and subscribers usage. Criterion 3: Impact on Customer Value The Endace list of elite customers stands testimony to its high-class network recorders and traffic visibility solutions. Flexible enough to meet the customer requirements of any industry, Endace solutions always deliver high customer satisfaction, adding more value to its brand name in the process. Criterion 4: Impact on Market Share The Emulex Endace line of products impact the network recorder and traffic visibility market in a profound manner, with a view to understanding the changing end-user requirements and emerging market trends. With a modular and customizable product portfolio, the Emulex Endace product line enjoys a competitive position in the global market place. Prior to its acquisition by Emulex, Endace reported group revenues of $41.2 million in March 2012, which is a growth of 7.3 percent over the previous years. 62 percent of the revenues were generated from the U.S. while Europe, Middle East and African markets generated a collective share of 28.9 percent. Criterion 5: Breadth of Applications/Markets Served EndaceProbe Intelligent Network Recorders are being used across different application segments including Telcos, internet service providers (ISPs), managed service providers (MSPs), enterprises, banking and financial sectors and government. The increase in the adoption of cloud-based services and web 2.0 applications are driving the demand for bandwidth. The adoption of 10, 40, and 100GbE make it challenging for service providers to gain 100% traffic visibility and manage the network effectively. In order to overcome these challenges, against a backdrop of declining ARPUs and increased competition, services providers take advantage of Endace solutions offered by Emulex to meet the SLAs and serve the best possible user experience. In addition, service providers are able to manage a wide range of network types, such as Ethernet and SONET/SDH, using network recorders and monitoring probes Frost & Sullivan 6 We Accelerate Growth

7 Government and Enterprises need to get accurate and granular visibility into the traffic that is flowing through their network. The Emulex product line of Endace monitoring and visibility solutions enable CISOs and government organizations to gain visibility into DDoS attacks, security threats and other performance factors related to the communication network. Considering the impact of security attacks on large organizations and governments, it is important to evaluate the level of attack and the sensitivity of information held within these networks. Endace works with the top intelligence agencies and government funded CERTs in the U.S. and Europe and six out of the top 10 banks in the U.S.. Emulex acquired Endace, in February 2013, providing the company with a strategic entry point into the network performance management (NPM) space at a disruptive time, as speeds move to 10, 40 and 100GbE. Providing network visibility from end-to-end is a critical requirement as networks converge, bandwidth grows and the extensive use of virtualization in the cloud, telco and data center environments continues to proliferate. The Endace product line provides network recording services that supports hundreds of applications in the NPM and APM space to provide 100% network visibility and recording, which allows them to go beyond mere detection services into true network diagnostic and resolution services. Conclusion Strong focus on developing products based on constantly evolving end-user requirements, breadth of end-user markets, rich customer base and strong performance over the years have given the Emulex Endace product line a leading edge over its competitors. The EndaceVision, EndaceProbe and EndaceAccess products provide highly scalable, efficient and cost-effective solutions for service providers and enterprises to manage the network proactively and effectively. In view of these commendable attributes, Frost & Sullivan is proud to present the 2013 Global Product Line Strategy Award in Network Recorder and Traffic Visibility Market to Emulex for its Endace product line. The CEO 360-Degree PerspectiveTM - Visionary Platform for Growth Strategies The CEO 360-Degree Perspective model provides a clear illustration of the complex business universe in which CEOs and their management teams live today. It represents the foundation of Frost & Sullivan's global research organization and provides the basis on which companies can gain a visionary and strategic understanding of the market. The CEO 360-Degree Perspective is also a must-have requirement for the identification and analysis of best-practice performance by industry leaders. The CEO 360-Degree Perspective model enables our clients to gain a comprehensive, action-oriented understanding of market evolution and its implications for their companies growth strategies. As illustrated in the Chart below, the following six-step process outlines how our researchers and consultants embed the CEO 360-Degree Perspective into their analyses and recommendations Frost & Sullivan 7 We Accelerate Growth

8 The CEO's 360-Degree Perspective Model Research 2013 Frost & Sullivan 8 We Accelerate Growth

9 Critical Importance of TEAM Research Frost & Sullivan s TEAM Research methodology represents the analytical rigor of our research process. It offers a 360-degree view of industry challenges, trends, and issues by integrating all seven of Frost & Sullivan's research methodologies. Our experience has shown over the years that companies too often make important growth decisions based on a narrow understanding of their environment, leading to errors of both omission and commission. Frost & Sullivan contends that successful growth strategies are founded on a thorough understanding of market, technical, economic, financial, customer, best practices, and demographic analyses. In that vein, the letters T, E, A and M reflect our core technical, economic, applied (financial and best practices) and market analyses. The integration of these research disciplines into the TEAM Research methodology provides an evaluation platform for benchmarking industry players and for creating high-potential growth strategies for our clients. Benchmarking Performance with TEAM Research About Frost & Sullivan Frost & Sullivan, the Growth Partnership Company, enables clients to accelerate growth and achieve best-in-class positions in growth, innovation and leadership. The company's Growth Partnership Service provides the CEO and the CEO's Growth Team with disciplined research and best-practice models to drive the generation, evaluation and implementation of powerful growth strategies. Frost & Sullivan leverages 50 years of experience in partnering with Global 1000 companies, emerging businesses and the investment community from more than 40 offices on six continents. To join our Growth Partnership, please visit Frost & Sullivan 9 We Accelerate Growth