State of the ADC Market – Part One

posted by Tracy Corbo   | August 26, 2013 | 0 Comments

It has been about 18 months since the EMA Radar for Application Delivery Controllers and Load Balancers: Q4 2011 was published. Since that time, most all of the vendors we reviewed have been actively expanding and extending solutions.  Given F5’s recent earnings announcement, it seemed as good a time as any to do a quick overview of the market and what is having the most impact. For starters, perhaps the most notable news was the exiting of Cisco from this market last year when Cisco announced the discontinuation of its ACE product line and replaced it with the Citrix NetScaler for their ADC needs. Cisco now sells NetScaler into accounts where application acceleration is required.  This has had ramifications across the ADC market as vendors scrambled to take advantage of Cisco’s departure, with competitors rapidly offering up replacement incentive programs to snap up disgruntled Cisco customers.

The market direction itself is being driven largely by several major factors: virtualization, SDN, cloud, and security.  While SDN is making the most noise, virtualization has probably had the largest impact on the market as a whole and can be looked at as a byproduct of the server virtualization push. Cloud in contrast has solidified, becoming a tangible set of solutions that are too a byproduct of virtualization. Back when the report was published, EMA estimated that almost 82% of the ADC market revenue for the vendors we surveyed was generated on hardware based platforms. None of the hardware-based ADC vendors were seeing more than single digit revenue on virtualized platforms. Since then ADC vendors find they are shipping a growing number of combination sales made up of both hardware and virtualized platforms into the same customer. Consequently, some vendors have seen their virtualization revenues grow to double digits. Finally, security has become more relevant, with several vendors putting full firewall capabilities into their ADC platforms.

Cisco Departs – F5 Continues to Dominate

The departure of Cisco from the ADC market in the fall of 2012 shrinks the playing field and provides new opportunities for rival ADC vendors. The pure-play vendors who derive the majority of their revenue from ADC products include: A10 Networks, Array Networks, Barracuda, F5, Kemp Technologies, and Radware. The remaining vendors we covered were Brocade, Citrix, Riverbed/Stingray, and Coyote Point Systems (recently purchased by UTM vendor Fortinet). For these companies, ADCs are not their primary source of revenue. F5 remains the dominant pure play vendor in this market. Their recent financial announcement showed that they exceeded revenue expectations in Q3 FY2013, where they saw the strongest demand for their mid- and entry-level products, the BIG-IP 4000 and BIG-IP 2000 series.

Virtualization and Cloud: Primary Focus

Virtualization and cloud are the big drivers and subsequently what is behind the SDN push.  At the time of the original report the vendors in this space displayed varying degrees of virtualization adoption. F5 at the time was noticeably holding back. However since then F5 appears fully committed to virtualization as well as embracing the cloud. The company has rolled out many new initiatives, including new global licensing models specifically targeted at cloud service providers.  Originally F5 only supported the VMware hypervisor, but now has support across all major hypervisors including KVM. The company even took a more aggressive approach towards SDN, including the February 2013 acquisition of LineRate, who specializes in layer 7+ networking services technology targeted at the application layer in an SDN-based environment. Other more recent announcements include ScaleN which provides a multi-tenant virtualization capability that gives operators the option to scale up, down, in or out within a single F5 device.

Competitors Become Alliance Partners

Following the effective demise of the Cisco ACE product line last fall, Cisco formed an ADC alliance with Citrix. You can read my previous blog post Cisco Trades In ACE ADC for Citrix NetScaler for more details. In June, Citrix announced an extension of the ACE Migration Program (AMP) through December of 2013. In April 2012 Citrix introduced their new TriScale Technology for NetScaler ,which addresses the need to scale in a variety of ways. It includes several models: pay as you grow, clustering, or consolidation on a single platform using multi-tenancy. Citrix has been a strong proponent of cloud computing, steering its own course first with the purchase of in 2011 and subsequently offering up CloudStack as an OpenStack alternative.  CloudStack is the foundation for Citrix’s cloud strategy.

Battle of the Feature Competitive Pure Plays

Radware and A10 Networks are battling it out on the pure play front and offer the most competitive solutions combined with a solid financial footprint to compete with the likes of F5, Citrix, and Brocade. Radware continues to innovate and add new features to their product line especially around security and attack mitigation, especially in the area of SDN. Radware worked with Juniper to fully integrate the ADC with Juniper Networks JunOS operating system. IBM SmartCloud customers can access Radware’s virtual ADC either on or off premise or over a hybrid cloud.  There are also touch points with other IBM products, including IBM applications and the PureFlex System. Radware is working with both VMware and Redhat to address integration points with their virtualization technologies as well. Radware ADCs initially only supported the VMware hypervisor, but have since extended support to include KVM and Open XEN. On the financial front, the company has enjoyed continuous double-digit revenue growth over the last three years.

A10 Networks is hot on Radware’s heels, having enjoyed amazing growth over the last two years. At the end of last year the Deloitte’s Technology 500 ranked them number 4 for Communications/Networking companies, stating a 3,985 percent growth rate during the period from 2007 to 2011. The company now has an annual run rate of around $120 million. A10 was previously lacking FIPS compliance but that has since been added across its AX and new Thunder series ADCs. Previously, A10 virtual appliance SoftAX only supported VMware ESX, but the product now runs on Citrix XenServer and KVM as well. A10 continues to push its Cisco ACE replacement program and see that as a great opportunity to expand its customer base.  The company is doing SDN work with NEC using the SoftAX-2 in combination with NEC’s ProgrammableFlow Controller.

In Summary

Cisco’s departure created a void in the market in which all competitors were glad to jump in and fill. The effect of that departure will continue to be felt as customers go through refresh cycles and revisit the options on the market. There is no question that virtualization and cloud computing have had a huge impact on this market. It is changing the competitive dynamics of the market as old alliances fall to the side and new ones emerge. Vendors who were previously more tentative regarding virtualization have realized that they must embrace the platform or risk being left behind as cloud computing becomes more relevant. Pure play solution providers continue to look for symbiotic areas of expansion such as security and threat management as well as network visibility and performance monitoring. Customers will benefit from added deployment options and offers from vendors looking to entice Cisco customers to their platform.

Part 2 of this series looks at how vendors have expanded ADC product portfolios, found market niches, and looks at the market threats and opportunities moving forward.

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