Wassup? Oracle Acquires Talari

Oracle’s decision to acquire software-defined WAN provider Talari Network, announced yesterday, is an exciting play from different angles. It sheds light on what’s afoot in the nascent SD-WAN market. And, it presents an important puzzle piece to the several dozen providers, much like Talari, all eager to succeed as SD-WAN vendors.

New SD-WAN Research

In a new SD-WAN survey conducted by the Eastern Management Group this month, 3,000 IT managers identified their global SD-WAN usage and plans. The study found 11% already use SD-WAN. The number will increase steadily, but just how far is unclear.

Only 15% of the 3,000 respondents are confident they will use SD-WAN by 2024. And 59% don’t yet know if SD-WAN will play any role for their organizations in five years.

SD-WAN_EMG.JPG

Eastern Management Group SD-WAN usage statistics

The Eastern Management Group

Our analysts believe market clarity and confidence may play a role in the tie-up of Talari and Oracle. Then there are other factors. We see the two biggest as Talari’s need for significant capital to build distribution and Oracle’s desire for an SD-WAN product. It already has distribution.

Talari is a small company with more than 500 customers. The business has recently been growing more than 100% year-over-year. But can it sustain this pace for another five years? There are many competitors in an uncertain market.

Talari needs to ramp up its distribution channel quickly, adding thousands of new partners if it’s to grow. But locking up VARs, systems integrators, and managed services providers is costly -- and gets harder when you’re competing with Cisco, Juniper, and other large vendors with thousands of locked-up channel partners to sell their SD-WANs.

As a pure-play company, Talari also needs a vastly more extensive portfolio of products and services for customers with more than 300 employees, the point at which IT managers play a significant role as buyers. All this takes money.

Something for Everyone

here is something for everyone in the Talari acquisition. Let’s look at it from the perspectives of Oracle, Talari, and the enterprise customer.

What’s In It for Oracle?

The Talari acquisition gives Oracle several benefits:

  •  Established market for SD-WAN
    • Enterprise customers with more than 1,000 employees account for 20% of SD-WAN users today
    • Mid-market businesses with 100 to 500 employees are another 20% of current SD-WAN users
  • Large pockets of existing SD-WAN customers in several vertical markets
    • Healthcare, education, professional services
  • Market assurance
    • The SD-WAN market should continue to grow for another five years or longer
  •  Geographical opportunity
    • Established SD-WAN market in the U.S., Latin America, and Asia Pacific
    • Underdeveloped SD-WAN markets in Europe, Middle East and Africa
  •  Inexpensive to play
    • There is speculation about a sizeable SD-WAN market down the road. Oracle can enter the market now for a reasonable investment.

What’s In It for Talari?

Talari, its customers, employees, and investors have a path forward in an uncertain SD-WAN market.

  •  Global markets access
  • Massive distribution channels
  • Relevance
  • Customer support
  • Scale
  • Capital
  • Comprehensive portfolio of products and services
  • The certainty that Talari has a future

What’s In It for Enterprises?

The acquisition of Talari by Oracle should be good news for enterprises. IT managers have their eyes on SD-WAN, but with more than 70 mostly small providers where does the enterprise go with confidence? Oracle helps here.

  • Major supply source
  • Many enterprises are existing Oracle customers
  • Global network coverage for sales and support
  • SD-WAN as part of the integrated network architecture
  • Oracle can educate the market, which is admittedly uncertain of what to do

SD-WAN is an industry with many providers and lots of customers. But it carries with it a measure of uncertainty about its future. The Talari acquisition looks to be a move in the right direction.

Overnight Research on Talari and Oracle was done by Eastern Management Group’s Network Research team. For more information on Talari and other SD-WAN matters talk to our analysts or contact [email protected].