Packeteer CEO Sees Partner Opportunities As Networks Evolve

Packeteer CEO Dave Cote explains in an interview with CRN why the continuing expansion of applications across far-flung networks is creating a services opportunity for solution providers.

March 11, 2005

7 Min Read
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Over the years, Packeteer has grown into a respected provider of network hardware that prioritizes packets, with its devices sitting at the intersection between the data center and the edge of the network. This year, the Cupertino, Calif.-based company plans to significantly enlarge its footprint with a product expansion drive that it hopes will extend the services portfolio of its partners. Packeteer President and CEO Dave Cote explained why the continuing expansion of applications across far-flung networks is creating a services opportunity for solution providers in an interview with CRN Editor In Chief Michael Vizard.

CRN: In the past, the need for products like Packeteer's was pretty much limited to the core of the network. What's changing these days that will give Packeteer a bigger profile on the network?

COTE: With the advent of MPLS-based networks, we see meshing that's occurring that requires technology like ours out on the edge more. As people try to deploy more things across the network, they need technologies like ours that help to maximize performance or block problem traffic.

CRN: What are you doing to help facilitate that?

COTE: A big priority for us from a product standpoint, which isn't very sexy, is improving our central management and our central reporting ability so you can manage 1,000 of these units from a single site. You can literally push the configuration out so you can now lower the total cost of ownership of deploying 1,000 boxes. Our goal is to have FedEx as the technician. You literally deliver the box, plug in power, and plug in Ethernet-in and Ethernet-out because it sits right behind the router. And you have the central site configured. We believe we've got to create a platform that delivers more functionality over time.CRN: What types of partners is Packeteer looking for?

COTE: In terms of our partner recruitment, we are looking for some larger players because the focus of our business is shifting to larger accounts, whether they're big, regional end customers or global end customers. We need a stronger mix of higher-end resellers. A good example of that would be larger, computer-oriented VARs trying to get into the services business. Right now, we tend to have smaller VARs as primary drivers for us. I don't know if we need a huge increase in actual numbers of partners. It's more about just getting better with the ones that we work with--getting them better trained, helping to build their business with us so that they don't see us as kind of an interesting, high-margin niche product for them but as something that they can actually begin to build their business around.

CRN: Are there other types of VARs that you're looking for?

COTE: We started a partnership with Avaya this past year, and we're looking for some strong, voice-oriented resellers because it has become much more of a driver. It used to be that the two main drivers were prioritizing mission-critical stuff and either blocking or insulating these applications from malicious traffic. Voice has kind of come become the third driver. There aren't too many of our current VARs that are big into voice. People today are still kind of brute-forcing it. In other words, guys have bought a lot of extra bandwidth. It's essentially hard-partitioning of bandwidth so you've really created a parallel network within your network. If you've overprovisioned, it works. But when you haven't and you're trying to manage the thing, then I think you run into problems.

CRN: Why should VARs consider adding Packeteer's products?

COTE: If you are a services-oriented VAR, you can deliver a service very easily using our product, with the ability to use the monitoring technology to provide ongoing reporting and health checks or to actually use the control technology to manage somebody's network. Those are the kind of VARs that I think are most successful with our product. They can generate anywhere from two to five times of revenue services on top of the hardware sales. That tends to be the profile of our better, stronger VARs that really do want to create managed services. One of the things you can do very simply is plug the box in, and it goes off and discovers which applications are actually running in your network and collects a bunch of diagnostics. The really good partners turn that into an opportunity to potentially deploy other technologies.CRN: How will your products evolve to support that?

COTE: We've actually introduced, back in November, a first phase of what we call Adaptive Response Technology. It's kind of an automation of our functionality where, based on data that we gather and thresholds that the customers sets, you clamp down on it until you can figure out what the problem is and can have the system--automatically in some cases--just gather more data. You see a certain kind of traffic turn up. If it exceeds some threshold, you can put a policy in place [where] it clamps down on it until you can see what the problem is. We're also looking at how do we extend the technology farther out to the edge. We've got fractional T1 technology all the way up to gigabyte, and we think extending that down to lower speeds that are more cost-effective in a higher number of branch offices. Today, 100-unit deals would be a big deal for us. We think we are starting to see 1,000-unit kinds of opportunities. We also just acquired Mentat, a satellite acceleration company. It's for long-haul, high-latency kinds of network links, so integrating that technology under the platform will probably be done later in the year. We are continuing to integrate that functionality into the box and then driving that out to the edge so you are able to get bigger and bigger deployments.

CRN: What is Packeteer doing about security?

COTE: We have a toe in security. Our customers use us to identify problem traffic and contain it. My question is, how much more do we need to do in that space? The flip side of performance is security, and the more that security is about problems within the network, it becomes sort of containment within your network. That feels a lot more like what we already do. We are trying to figure out from the product space to see if [security] makes sense to do and how much we need to partner with others. That's kind of the strategic question in terms of what do we do next with our technology.

CRN: Have you given any thought to entering the small- and midsize-business market?COTE: I think we have a play in what is described as the midmarket. In SMB market, the issue is that it would probably be a pretty pure software play. We would need to take a subset of the software and deliver it as a service.

CRN: How important are solution providers going to be vs. the big carriers in this space?

COTE: The incumbent carriers' opportunity over the last three or four years was to try to get into value-added services. They keep talking about it, but it's not clear they're making a move. So is there a new set of alternative carriers? The Yahoos of the world are kind of controlling the Internet. I think we are going to see more of those players come into this space. The question is whether they or any of the carriers can really go after value-added services. At the top of those companies, they talk about value-added services, but the day-to-day sales rep is still selling circuits. A lot of them still need to change their commission structures so they don't get paid as much on the basic circuit sales as they do on some kind of service. Unless some of these large carriers can create a services business that can compete with midsize VARs or systems integrators, I think they'll become less relevant.

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