F5 Networks is already the 800-lb gorilla of the application delivery networking (ADN) space, but following Cisco's confirmation that it would cease investing in load balancing products and essentially exit the market, the Seattle company isn't missing a chance to fortify its position.
F5 has long had a trade-in program for solution providers swapping out Cisco products for F5 ones, but the company recently expanded that program under which it will now offer twice the trade-in value for Cisco load balancing and global server load balancing (GSLB) products.
What's more, F5 partners can earn additional front-end discount margin when a Cisco ACE trade-in SKU is included in a purchase. They can also combine those promotions with F5's eight-month-old Vault program for security sales, meaning that VARs and integrators can make more money both for tearing out Cisco gear from customer data centers and playing up the security aspects of F5's BIG-IP ADN family and other products.
Dean Darwin, senior vice president, worldwide partner organization at F5 said the company's already seen a strong migration of Cisco customers to F5's side.
"Combining these programs together gives the F5 channel partners a very compelling program to drive value for customers," Darwin told CRN.
Last month, CRN was first to confirm that Cisco would end development of its Application Control Engine (ACE) load balancer products, following rumors that Cisco was urging its sales staff not to highlight them to customers. The ACE offering is a module for Cisco's Catalyst 6500 switches and 7600 routers that provides load balancing, content switching, application acceleration and security capabilities.
Cisco's ADN market share -- said to be about 11 percent, according to Dell'Oro Group and other researchers -- has been in decline for years, down from about 30 percent in 2008. By contrast, F5 controls about half of the overall market for Layer 4-7 switching, even though, at just north of $1 billion in revenue, it's a fraction of Cisco's size.
Ittai Kidron, managing director with Oppenheimer & Co., said that by offering such aggressive trade-ins, F5 might stymie its gross margins and sales commissions. However, said Kidron, the market-share pickup might be worth that hit.
"We believe Cisco generated ~$180m-$190m in ADC revenue in 2011," wrote Kidron in a research note this week. "While we don't expect F5 to take home all the spoils, the opportunity is sizable at roughly 16% of F5's 2011 revenue."
F5 was among several ADN vendors that pounced on Cisco's ACE admission. Both Radware and A10 Networks, for example, are offering lucrative trade-in promotions for channel partners and customers. And Citrix, which battles both F5 and Cisco in some categories while partnering with Cisco in others, recently allied with network security specialist Palo Alto Networks for pushing validated infrastructure designs through channel partners.
PUBLISHED OCT. 10, 2012