Riverbed vs. Cisco, Sometimes Goliath Wins!

Implications: Riverbed jumped into the WAN optimization market with innovative technology and an effective business plan.  Their success has justified the market, but they face an uphill battle against the big network vendors.  Ongoing innovation gives them some hope, but their long-term viability is at risk.

Analysis: In the early days there was application acceleration, based primarily on optimizing various applications protocols, such as Microsoft’s CIFS.  Network optimization took an entirely different tack, focusing on improving data traffic.  Both provided a small but thriving market for a number of vendors such as Packeteer, Radware and others.  Then Riverbed came along with innovative technology that combined the best of both into one relatively inexpensive box.  It was like Christmas for businesses facing escalating network costs and application delays. 

Placing a couple of Riverbed accelerators at both ends of a corporate WAN meant that 4Mb links were enough in many cases – no need to upgrade that Bangalore office to a 20Mb connection!  Of course, some WAN links were under-utilized already, so further acceleration was unnecessary, but as companies became more decentralized WAN links started coming under increasing pressure.  For businesses with over-stressed WAN links, particularly into less-developed countries, Riverbed promised (and delivered) stunning performance gains.  In some cases the ROI could be as little as 3-4 months.  The cost of the entire Riverbed installation might be no more than increased WAN bandwidth would cost for 3-4 months.  Performance gains of 1-5,000% were achievable in the real world.  LAN performance over the WAN was a fact.

Unfortunately for Riverbed, this rosy picture was evident to the networking giants, most notably Juniper and Cisco.  Both have entered this market with competitive products and pricing within the last 12-18 months.  That allows the compelling argument of one less vendor in the corporate network, potentially less TCO, and possibly at some point more effective implementations as this technology is more tightly integrated into routers and switches.  As one Cisco executive allegedly stated, “…we have more engineers working on this product than Riverbed has employees!”  Whether or not that is true, the message is clear.

Riverbed has responded with continuing innovation, but whether that will be sufficient to sustain them for the long-term is an open question.  Products from Cisco and Juniper are competitive today in terms of price, performance and functionality.  As they integrate those products more tightly into their networking products, the potential (and real) market for Riverbed shrinks.  It’s too early to write off Riverbed, but one must be dubious about their long-term prospects.  Naturally, any other independent vendors attempting to survive in this market are embarked on a suicide mission.