Riverbed acquires Zeus in application delivery push

Acquisition sign

WAN optimisation specialist Riverbed (NASDAQ:RVBD) has acquired Zeus Technology, a specialist in software-based application delivery controllers (ADC).

Riverbed has bought the Cambridge-based firm for $110m in cash to add what it believes is the highest performance ADC with the broadest range of hypervisor support including VMware, Xen, HyperV and KVM.

Apurva Davé, VP of product marketing for Riverbed describes the acquisition as forward thinking: “There is a disruption in the application delivery market, the market for virtual ADC is growing at three times the rate of legacy hardware and no company is in a better position to take advantage of this then Zeus.”

Although Davé admits that Zeus might have less than 10 percent of the total ADC market, he says following discussions with analysts it believes it might have as much as 50 percent of the software-based ADC market.

The current Zeus senior management will all stay, with the company becoming an operating division of Riverbed. To keep key staff in place, the firm has a lock-in clause that will release an additional $30m in cash based on the achievement of certain targets in a defined twelve month period following the closing.

Riverbed also announced the acquisition of web content optimisation firm, Aptimize Limited. In Davé’s view, the acquisitions will allow Riverbed to edge “closer to the application”, which is where he feels the ADC market is moving.

From a distribution standpoint, the there is a good fit with both firms currently sharing Avnet Technology Solutions and Zycko as UK distributors. Davé confirmed that the Zeus products will, “for the time being” retain its current branding and the firm will begin a training campaign to get its current partners up to speed on the new opportunity.

Commenting on the deal, Bruce Hockin, head of business strategy, Avnet Technology Solutions UK says, “As the technologies from both acquisitions are highly complementary to Riverbed, business partners will have the ability to add value to their customers and increase deal sizes.”

Piers Carey, CEO of Teneo, a network optimisation specialist and Riverbed Platinum partner felt it was a “bold move” and that the “...the prospect of combining the technology expertise from both Zeus and Riverbed for asymmetric data traffic is compelling.”

Channel Pro comment:

Based on 2010 Gartner estimates, the market share leader in the ADC world is F5 Networks with around 44 percent followed by Cisco with 22 percent then Citrix on 11 percent and Radware on approximately nine percent. This leaves a gaggle of vendors including Zeus, A10, Brocade and Barracuda fighting over the last 14 percent. Although Dave dismisses the big guys as hardware centric, top dog F5 does have a software ADC – although it is admittedly more expensive than the Zeus equivalent. Some might argue that the relatively cost competitiveness of the Zeus solution with Riverbed’s strong brand is the perfect up sell for its channel.

ADC and WAN optimisation are both technologies often sold in conjunction with a move to cloud computing and virtualisation which make either area perfect for a piggy back sale of the other.

Rival Cisco has not developed its ADC technology much since it bought out ArrowPoint nearly a decade ago. Worse, in the last few years it has steadily lost market share. The current ‘single stack’ trend could also mean that the Riverbed’s acquisition might be the first salvo in a round of buying.