May 19, 2011 Issue Paula Musich Current Analysis Senior Analyst, and Security The fairly mature WAN optimization market, which has evolved to offer predictable, but not very explosive growth, as well as a stable set of top competitors, is suddenly new again. And what s shaken things up in that steady growth market, which serves for the most part large enterprises that have multiple remote locations and data centers with centralized file, messaging and application servers, is the move to cloud computing. That move breaks the symmetric deployment architecture of most WAN optimization overlay networks, which require appliances at both ends of the connection that work together to improve performance, either between multiple data centers or between the data center and the branch office (or individual road warriors using a laptop-based agent connected to a data center WOC). As enterprises move applications to the cloud, they no longer have the option of installing WAN optimization appliances in the service provider s data center. While a few startups such as Aryaka and Virtela have begun to address that shift with hosted, asymmetric WAN acceleration services, the two 800 pound gorillas in the WAN optimization and content delivery networking markets legitimized the fledgling asymmetric market with an announced partnership to combine their respective technologies to provide similar services. At the same time, rival Blue Coat announced its own one-armed capability along with other software enhancements and a new high end MACH 5 appliance for data centers. The fact that both announcements took place at spring Interop underscores the renewed competition in the market and gathering strength of the trend. Current Perspective The Riverbed/Akamai partnership and new Blue Coat services are driven by the prolific expansion of cloud-based services as well as the adoption of private/public, or hybrid cloud implementations that span public networks and private data centers. The partnership is also undoubtedly a nod to competitive pressure brought by a new wave of startups that deliver WAN optimization as a service. Such startups include Aryaka, created in 2008 by former Speedera founder Ajit Gupta, and Virtela. Aryaka at spring Interop announced that it has completed the construction of 25 points of presence in its application acceleration network, which does not require customers to buy and deploy expensive on-premises hardware but claims to deliver less than 20 milliseconds of latency for some 90 percent of business Internet users around the globe. Virtela s cloud-based application acceleration service relies on a network of 50 PoPs distributed around the globe to optimize performance for latency-sensitive, realtime applications. It supplements that service with an on-premises software-based application acceleration option that does not rely on Virtela s overlay network, but delivers acceleration over the customer s existing carrier or ISP network. While Aryaka uses its own optimization technology to boost application performance over WAN links, Virtela uses off the shelf technology from existing WAN optimization vendors. Virtela does Europe +33 (0) 1 41 14 83 15. Or visit our Web site: www.currentanalysis.com 1
not disclose who its source is, however. Both startups target medium-sized enterprises that do not have the budget or expertise to deploy and maintain traditional WAN optimization appliances. Both democratize WAN optimization, giving those medium sized enterprises the performance boost only available to large enterprises before they came along. But those small startups will have a short period of time to compete, and gain credible market share on a relatively wide open playing field before Riverbed and Akamai begin to deliver on the fruits of the partnership they announced at Sprint Interop. The strategic partnership calls for Akamai to put Riverbed Steelhead technology in the edge nodes at its points of presence (PoPs) to allow enterprises to apply Riverbed optimization to any cloud service, whether the service provider is a customer of Riverbed/Akamai or not. Akamai will start with strategic POPs that are closest to the data centers of well-established SaaS providers such as Salesforce.com and others. This approach however, is not end-to-end, and it is unclear how much of a drag on performance the last mile of un-optimized WAN links will be on the new service. Riverbed will also integrate Akamai s routing and caching technologies into its Steelhead appliances in the data center. The aim is to create a service to accelerate cloud-based applications using a hybrid cloud service. The exchange and integration of their respective technologies is intended to extend the network and application performance benefits from inside the corporate firewall to the Akamai edge node that is closest to the SaaS provider s data center. The multifaceted agreement also calls for joint go-to-market activities in addition to joint development work. The combined technologies will be rolled out in phases across the globe. The Akamai partnership launch comes on the heels of Riverbed s expansion of its Cloud Steelhead initiative aimed marketing specialized controller to cloud service providers. In April Riverbed expanded the number of Cloud Steelhead customers to include such heavy hitters as Terremark, ZettaServe and Xtium, which are all validated for compatibility. In addition, CloudSwitch and Media Platform are technology partners, and Riverbed had already begun work prior to that with Amazon EC2 and VPC. With Riverbed/Akamai, the combination of the two 800 pound gorillas in their respective and formerly parallel markets will no doubt give pause to larger enterprises that may consider such services in lieu of a more expensive and hardware intensive symmetric implementation. But the idea is, in fact, to expand the addressable market for WAN optimization to smaller enterprises that can t afford the more expensive symmetric WAN optimization deployments, which typically require a dedicated IT specialist to maintain and manage the overlay network. Still, Riverbed and Akamai appear to be in no hurry to deliver their integration, with integration work not due until H1 2012. That won t likely stop smaller enterprises from adopting asymmetric WAN optimization services from the newer startups or other service providers. Should those services prove to be effective, they could undermine the healthy margins market leader Riverbed has had with its traditional symmetric Steelhead appliance business, which is expensive to deploy and maintain. At the same time, the partnership is not exclusive. Akamai already has an existing and similar partnership with IBM to optimize WAN links for IBM s WebSphere applications and treat IBM s Datapower appliances as equivalent nodes in Akamai s CDN network of 90,000 PoPs. In its inimitable confidence, Akamai believes the partnership could hasten the broader adoption of SaaS applications by eliminating the performance hurdle posed by applications housed in only a few data centers and the potentially long distances such applications much traverse to get to the remote user. Performance, however, is only one stumbling block to greater SaaS or cloud adoption. An even greater hurdle is the security of moving mission critical applications into someone else s data center, where there is less control and greater concerns for privacy and protection from cyber criminals. Security is frequently cited as the prime factor keeping enterprises from moving more applications into the cloud. Meanwhile, other major Riverbed competitors are not sitting on the sidelines. Blue Coat, which is among the top five WAN optimization vendors in the market, added a new CloudCaching Engine Europe +33 (0) 1 41 14 83 15. Or visit our Web site: www.currentanalysis.com 2
in the new SGOS 6.2 software release announced at Interop. The CloudCaching Engine adds an asymmetric WAN optimization option to Blue Coat s existing symmetric optimization technology to accelerate cloud-based SaaS applications where customers don t have the option of installing a WAN optimization appliance. The CloudCaching Engine is an enhancement of Blue Coat s foundational content caching technology, which is designed to optimize the performance of Web applications, large video files and dynamic Web 2.0 content delivered over WAN links. CloudCaching Engine, which only performs object caching, rather than the combined object and byte caching of Blue Coat s existing symmetric optimization, is also capable of accelerating SSL encrypted traffic, even without control of the cloud service provider s authentication certificates. Blue Coat is also targeting such SaaS services as Salesforce.com, and it demonstrated at Interop the ability to shave six seconds off the delivery of a 1.33 MB Salesforce.com file by serving it from a local cache. After an initial delivery of seven seconds, subsequent access to the Saleforce.com 1.33 MB file was cut down to one second, not only improving performance, but also freeing up more bandwidth. Blue Coat with its new CloudeCaching Engine it has also set its sights on Microsoft s online Sharepoint service. The company claims that it can provide an average performance increase of 40 times for Microsoft SharePoint BPOS, without requiring an appliance or virtual appliance in Microsoft s online SharePoint data centers. Beyond the move to cloud-based application services, Blue Coat believes other factors are fueling an increased interest in WAN optimization. For example, it has seen much greater demand over the last 12 months for optimizing video delivery. Thomson Reuters, for example, uses Blue Coat s WAN optimization technology to accelerate the delivery of video-based news feeds to Wall Street firms. Retailers that provide videos and Web access to store patrons are also demanding greater performance for video applications. Although historically the enterprise content delivery networking (ECDN) market segment has addressed the latency issues and heavy bandwidth consumption problems associated with live video streaming and recorded video content, Blue Coat and others see opportunities for WAN optimization vendors to add video optimization as a feature in their physical or virtual appliances. Blue Coat believes that move could increase the size of the market and increase the value for customers looking to minimize the infrastructure burden that comes with distributed video servers. In support of video optimization, Blue Coat s new SGOS 6.2 release adds optional support for Adobe s RTMP protocol, which provides video caching for on-demand Adobe Flash content. This option, developed jointly with Adobe, supplements existing video optimizations in Blue Coat s portfolio. Blue Coat already offers stream splitting for live video feeds in its WAN optimization appliances, and it can locally cache on-demand HTML 5 and Microsoft Silverlight video content distributed over the Web. Blue Coat in fact claims that it can deliver over 500 times the bandwidth capacity for on-demand video, and the company claims its new RTMP support is unique in the market. One other additional driver of increased interest in WAN optimization is the trend toward connecting remote branch offices directly to the Internet, rather than going through a private WAN connection first. That trend also fuels the need for asymmetric WAN optimization. How much those new factors will increase market demand and the size of the market is an open question. By one account, just over half of all companies use SaaS services now, and the average number of SaaS applications used per company is increasing from less than two in 2010 to over five this year. In terms of market position, getting an accurate picture is a difficult proposition. Riverbed is the clear market leader with anywhere from a 43% market share to a 34.5% market share, depending on the source. Who numbers two, three and four are is a matter of debate, but they include Cisco, Blue Coat and Citrix. Cisco, another 800 pound gorilla in its own right, has been curiously silent on the question of asymmetric WAN optimization for SaaS services. Although Cisco put together a cloud-ready kit Europe +33 (0) 1 41 14 83 15. Or visit our Web site: www.currentanalysis.com 3
for services providers and added a virtual appliance, it has not jumped onto the asymmetric WAN optimization bandwagon so far, and it dismisses the startups that were formed to address the cloudbased WAN optimization opportunity. Sometimes considered the number two market share leader in the space, Cisco in the early stages of the WAN optimization market struggled with its Wide Area Application Services (WAAS) solution. It has since addressed the WAAS quality issues, but it is not viewed as a technology leader. Instead it is differentiated on the breadth of its WAAS product portfolio. For its part, Cisco sees the greatest potential for growth outside its installed base coming from VDI. It has already added support for the Citrix XenClient. All of the vendors chasing this new but unproven opportunity to accelerate cloud-based SaaS services want to believe that performance is a gating factor to greater adoption of those services, and that they have the right solution to solve that problem. Riverbed in its partnership with Akamai is claiming performance is the factor inhibiting greater adoption of SaaS, but that s not really true. The most significant inhibitor is really security, and that will take some time to sort out. Cloud services providers for the most part don t view securing customers applications as part of their job description. And, if the migration to cloud-based application services requires a series of supporting services to prop up the move, that just adds to the cost of the cloud-based service, which makes it less appealing. Hosted WAN optimization is really not yet a market. It is early days, and it s not clear how soon or how thoroughly enterprises will embrace it, although SMBs are leading the charge. Chasing this new opportunity could be thought of as further segmentation in a maturing market. This comes on the heels of another successful segmentation in the WAN optimization market: that of optimizing connections between data centers using high performance optimization that allows for block-level compression and caching. That segment is dominated by SilverPeak, which was initially ahead of market demand, but wisely held onto its cash in the midst of the great recession but is now quickly ramping up and commands a healthy lead. Recommended Vendor Actions Riverbed and Akamai don t seem to be in much of a hurry to deliver on the integration planned in their partnerships, and that could come back to haunt the two respective market leaders. Smaller startups are gaining traction, and rivals like Blue Coat are moving faster to deliver their optimization for cloud-based applications. Blue Coat should pursue partnerships with key service providers looking to add WAN optimization services for cloud-based applications. That would give it credibility as a supplier and help it to expand its addressable market as it delivers its new CloudCache engine. Cisco should not sit on the sidelines and allow others to develop and dominate this new opportunity. Cisco has been slow to innovate in the WAN optimization market, due largely to earlier problems with its WAAS technology. Now that those issues are behind it, Cisco should move more quickly and aggressively to pursue this new segment. Startups such as Aryaka will have to move quickly to ramp out its WAN optimization service and strive to gain visibility in the market. With Riverbed/Akamai moving into the market in 2012, it will have a significantly large competitor with much deeper presence and marketing budgets to go up against. The company will have to get creative in playing David to the pair s Goliath. Blue Coat will have to price its new one-armed WAN optimization option carefully in order to balance sales of existing symmetric deployments to larger enterprises while addressing the more cost-sensitive mid-market. Europe +33 (0) 1 41 14 83 15. Or visit our Web site: www.currentanalysis.com 4
Recommended User Actions As enterprises of all sizes look to migrate more applications to the cloud, they should take into account the performance implications of such a move. The cost of WAN optimization for those applications should be factored into the move to insure its success. Enterprises adopting SaaS services would do well to evaluate the growing range of WAN acceleration options becoming available in the market. Not all the approaches are the same, and the startups are challenged when it comes to scale. At the same time, with competition increasing, cost concessions are more easily negotiated. Enterprises looking to build out ECDNs now potentially have lower cost options for supporting distributed video traffic, as more video support is added to WAN optimization appliances. Both approaches should be weighed before committing to more video server infrastructure. The benefits of WAN optimization for cloud-delivered applications are not universal for all applications and models. Enterprises with traditional data center models or that have split/hybrid services hosting will likely find greater value in WAN optimization than those buyers that use mass cloudbased applications such as Google Apps. At the same time, it s important to assess the effectiveness of the optimization for the specific applications that require optimization. Any enterprise evaluating cloud-based WAN optimization services should be sure to compare SLA s and evaluate the service provider s reporting tools. Stronger and more complete SLAs and reporting tools are a good indication of a more effective service. Europe +33 (0) 1 41 14 83 15. Or visit our Web site: www.currentanalysis.com 5