Riverbed's 2nd Act: Xirrus Acquisition
A decade ago Riverbed was smack in the middle of a phenomenal run, as the company had made itself synonymous with WAN optimization. The value proposition was simple, many applications ran poorly over the enterprise WAN and Riverbed's SteelHead solution magically made things better. Riverbed wasn't the first WAN optimization vendor, but it was certainly the loudest and most aggressive, and it became a household name.
But, as the famed songwriter Bob Dylan stated, "The times, they are a changing," as things in technology tend to do. WAN optimization growth slowed, as did Riverbed's growth. In 2014 the company was taken private so it could figure out what the company's Act II would be.
Riverbed's Transformation Journey
The first step in the transformation of the company was the acquisition of SD-WAN vendor Ocedo in January 2016. The next move came earlier this year when it announced Riverbed SteelConnect, which married Ocedo's technology with SteelHead and network management software, SteelCentral. The result is a product that enables businesses not only to evolve the WAN into one built on broadband, but also optimize the transport with Riverbed's optimization technologies.
This week, Riverbed added another piece to the puzzle when it acquired Xirrus, one of the few remaining Wi-Fi pure plays. At first glance, this might seem like an odd fit. Riverbed has lived its entire life at the WAN edge and now it's picking up a technology that is part of the corporate LAN. But the move isn't as crazy as it seems if you've been following how Riverbed is defining an "SD-WAN."
Almost all SD-WAN vendors focus on evolving the WAN from high-price MPLS links to either all broadband or some kind of hybrid configuration where broadband and MPLS are both used. However, Riverbed's thesis, and I agree with it, is to redesign branch infrastructure along with the network. Migrating to an SD-WAN solves some of the problems for network managers when dealing with branch offices, but managing the local LAN, Wi-Fi, and the multitude of servers can be just as big of a problem.
Riverbed's SteelConnect lets customers consolidate those branch functions down to a single platform and manage it from a central location. The product is unique in its ability to extend policy-based orchestration into the local area network, and that includes Wi-Fi.
I recall almost a decade ago discussing the vision of the wireless, server-less branch office with Riverbed, but the technology didn't exist to make it a reality. Today, through a combination of the cloud, virtualization and low-cost hardware, a server-less office is certainly feasible. The addition of Xirrus to Riverbed's SD-WAN will make it possible to not only make the branch completely wireless, but also control it from a central location. As I pointed out in this No Jitter post, the value of an SD-WAN is driven from the separation of the control plane and data plane, which delivers a level of network agility that can't be achieved with legacy technology. The extension of orchestration and control all the way to the wireless access point is another proof point that SD-WAN is about more than cost savings.
The financial terms of the Riverbed-Xirrus deal were not released, but I suspect Riverbed got a good deal. Avaya Networking's Wi-Fi solution was an OEM of Xirrus, and my estimate is that it accounted for 30-40% of Xirrus' total business. If Avaya's networking business unit does indeed wind up as part of Extreme Networks, it's likely that OEM agreement will eventually go away. I suspect Xirrus was faced with a choice to either take Riverbed's offer now or roll the dice and see what happens in the future. Given the consolidation the industry has seen in Wi-Fi, becoming a larger organization was a better strategy than trying to go it alone as a pure play after losing your largest reseller partner.
There's one more element of the deal that has been overlooked in other stories I have read. In addition to having great hardware, Xirrus has an excellent cloud management platform. I've talked to some of its customers as well as people at Avaya who have told me the cloud software has visibility and analytic capabilities and should compliment Riverbed's current software nicely.
With Xirrus being taken out, that leaves only Aerohive, Mojo Networks and start-up Mist as the lone remaining Wi-Fi pure plays. Given the importance of Wi-Fi, I suspect there are more shoes to drop; but for now, Riverbed added an important piece to its march towards its own transformation.