Brocade Intends to Acquire Assets of Riverbed SteelApp Business

Brocade Communication Systems, Inc. announced its intent to acquire Riverbed Technology, Inc.‘s SteelApp product line in an all-cash asset transaction.

SteelApp is a virtual ADCs providing scalable, secure, and elastic delivery of enterprise, cloud, and e-commerce applications. The product line controls traffic to and from applications and enables fast, reliable, and secure application delivery to users anywhere from the cloud or data center.

Under the terms of the agreement, Brocade will acquire the assets of the SteelApp business unit, and development and field personnel will join Brocade after closing. The addition of the SteelApp product line extends Brocade’s software portfolio and enables advanced solutions for the company’s data center and service provider customers.

The New IP, a datacenter-centric IT revolution, is changing the rules of how network infrastructure is designed and provisioned. One of the key trends is NFV (Network Functions Virtualization), the conversion of network elements from hardware to virtualized software. The ADC product segment is one of the earliest to make this transition; Dell’Oro reports the nearly $2B ADC market is in the throes of the NFV disruption, with virtual ADCs growing 30% CAGR vs. only 1% for hardware ADCs.

ADCs provide application availability, acceleration, and security for users. This includes shielding them from interruptions due to bursts in demand, providing various optimizations based on application type, and facilitating access based upon specific policies. Deploying this functionality in software (vADCs) enables a better level of flexibility and cost, and aligns with Brocade’s NFV strategy.

“The decision to divest the SteelApp product line reflects Riverbed’s ongoing commitment to focus on businesses and opportunities that leverage our core competencies,” said Jerry M. Kennelly, chairman and CEO, Riverbed. “Riverbed is focused on providing solutions that provide CIOs unparalleled visibility, optimization, and control in the hybrid enterprise, ensuring on-premises, cloud and SaaS applications perform as needed.”

“Brocade continues to execute aggressively to capitalize on the disruptive force of software in IP networking,” said Lloyd Carney, CEO, Brocade. “Brocade is the #2 data center networking vendor worldwide and this acquisition strengthens Brocade’s unique position as the adoption of software-centric networking is accelerating. We are thrilled to add SteelApp’s widely-adopted solution to our portfolio and will invest our existing ADC resources to aggressively advance the roadmap and extend it into our open Vyatta Platform offering for NFV and SDN.”

The SteelApp product line will be added to Brocade’s growing portfolio of software networking products including virtual routing, firewall, VPN, SDN controller, and network visibility and analytics.

Combined with its portfolio of network hardware products, these additions strengthen Brocade’s portfolio for data center deployments, spanning enterprise, cloud and telco customers.

The acquisition of SteelApp is another component of Brocade’s investment strategy, complementing the acquisition of Vyatta (virtual routing and firewall) and Vistapointe (virtual network visibility and analytics). Combined with investments in early stage disruptive SDN and NFV technology companies, this acquisition emphasizes Brocade’s commitment in open and emerging New IP technologies.

Upon completion of the acquisition, the assets of the SteelApp business unit will become part of Brocade’s software business unit, led by Kelly Herrell, SVP and GM.

Terms of the acquisition are not being disclosed, and it is expected to close in Brocade’s second quarter of fiscal 2015, subject to customary closing conditions and regulations.

Following the acquisition, Brocade expects its financial performance to remain within the non-GAAP operating margin target range presented at its September 2014 investor day.