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WOCs Address Soaring Bandwidth Demand

The wide area network (WAN) optimization market is expected to grow almost 60% over the next five years, with sales predicted to reach $1.65 billion in 2016, from $1.05 billion in 2011. WAN optimization controllers (WOC), as they’re called, not only speed up network traffic and improve the performance of applications, they also help enterprises avoid costly upgrades to bandwidth capacity.

“[Customers] can’t continue to chase this ‘we need more bandwidth’ [mantra] because, fundamentally, the growth in demand for bandwidth far outstrips the reasonable cost of supplying more bandwidth,” says Mark Urban, senior director of product marketing at Blue Coat Systems, one of three companies in Gartner’s leaders quadrant of WOC providers.

Gartner, in a report on the WOC market published Jan. 24, stated that WOC investments can improve the response time of business-critical applications and “can also help to maximize return on investment in WAN bandwidth.”

WAN optimization controllers work to reduce latency on network traffic, primarily in the connection between data centers and branch offices or, in the case of retailers, to the many stores in a chain, says Alan Weckel, senior director at Dell'Oro Group, the networking research firm that came up with the $1.65 billion forecast for network WOC spending in 2016. Another smaller part of the WOC market is data center-to-data center connections, sometimes between different countries.

Wider use of videoconferencing is one of the drivers for WOC demand, says Weckel. It used to be that if the home office wanted to send a sales training video to each of its stores, it would send that across the WAN overnight and the video would be available for playback the next day. But now, if a retailer wants to do a live video call with stores, that puts more demands on the network.

“It’s very much new technology, new algorithms to think about how to handle that, how to handle the quality of service to that link,” he says.

Riverbed Technology joined Blue Coat in the leaders quadrant of the Gartner Magic Quadrant report on the WOC market. Like other WOC vendors, Riverbed sees demand from enterprises that undergo data center consolidation by adopting virtualization, which requires a rearchitecting of the network. The company also recently partnered with Akamai to reduce latency in the delivery of software-as-a-service (SaaS) applications across WANs.

The third leader in the WOC space is Silver Peak Systems, which recently opened a Virtual WAN Optimization Marketplace, allowing customers to download a virtual version of its WOC products.

“Historically, these products have been sold as appliances,” says Rick Tinsley, president and CEO of Silver Peak. “It's relatively straightforward to take the software that runs on those appliances and unbundle it from that hardware.”

While 2012 is the fourth consecutive year that Blue Coat has been placed in Gartner’s leaders quadrant, the research firm raised some concerns about the company’s performance, noting that sales had been “stagnant” and that “there has been significant management churn at Blue Coat.”

Blue Coat’s Urban acknowledged the company’s difficulties, but says that recent changes at the company aren’t reflected in Gartner’s analysis. Blue Coat announced in December that it was being taken private after being acquired by a private equity group led by Thoma Bravo, a deal completed Feb. 15. The company has a new CEO and is newly focused just on Web security and WAN optimization. And thanks to a new marketing push on WAN optimization, its sales have grown significantly in the last two quarters.

“We certainly intend to drive the growth of this business much faster than we have [in the past],” says Urban.