A lot of this seems like it's happening organically. Will you acquire in security too?
We're always looking. You're never going to get me to say we will or we won't acquire. If it makes sense to acquire rather than build, well, we're looking at technology, looking at other companies, looking at whether it's such a good fit we can use that channel and have synergy.
But you have the pieces you need?
No, not quite. If you look at another area we're interested in, device management and what's happening around BYOD, we're looking at that. We're doing some stuff internally.
Speaking of your acquisition strategy, you are branching out again. In February you bought Traffix and I understand the interest in Diameter-based signaling products for 3G, 4G/LTE and IMS traffic, but that's a space where it's fair to say a minority of your channel partners focus.
That's correct, that's really focused on the service provider space. Partners like an Ericsson, that type of partner. But having said that, our belief internally is that with the classification capability that comes along with the whole service provider space, [channel partners] do want to look at some of the service provider solutions. Maybe not Diameter, and I don't want to be too specific, but a lot of technology companies are interested n that whole ability to see what service providers are doing. That's how it's more in the general channel.
You've talked up what sounds like an across-the-board product refresh. What's coming?
The first piece we will be a classic product refresh, yes, where we add five times the performance and a significant price performance advantage. The whole appliance line will be refreshed, so almost by definition that becomes a growth driver. We're building an eight-slot VIPRION chassis, which we currently have in four slots.
And there are updates for TMOS?
Absolutely. Here's the way we think about the business at the moment. We think of the core application optimization business, we think of security and that being the next area of business for us, we think of service provider, which is specific in itself and the traffic management business, and the fourth area we think of is the whole area of the cloud and management. I know they're all intertwined, but we view them as fairly differentiated. What we're doing in the next release is in management versions across all the hypervisors -- more and more management over time to effectively orchestrate applications easily and build policies.
NEXT: F5's Competition Mounts Up
We've talked about the competitive mix before and in application delivery networking, F5's base, that mix hasn't changed all that much. But as you grow into other areas like security it seems like you will be competing more with the likes of Cisco, Juniper, Palo Alto Networks, Riverbed, taking on new competitors as you grow out from that base in concentric circles. So how does that mix change?
It's an interesting question, and you're right, a lot of what we do isn't just load balancing sales, and we will come up against definitely Cisco and Juniper, to some degree Check Point though not so much, and probably Palo Alto over time, who knows. In the core businesses it is the usual: it's Radware, it's Citrix, it's A10. Not a big change.
You don't see Riverbed as a competitor?
Not much, no. We look at the number of our engagements and the win rate, and they're pretty much almost not on the charts.
I understand the differences between your data center approach and what they picked up with Zeus in application delivery controller technology, but you don't see your focuses coming more in line with the other?
I doubt it. If you look at the performance, it's maybe a 2-Gbps, maybe a 3-Gbps or let's say 4-Gbps for the sake of argument. Our mid-range VIPRION 2400 starts at 14-Gbps and goes up to 160-Gbps. That's just simple performance, and in an encrypted environment, forget it. There are so many constraints on what they can actually do, it's pretty limited. If you look at what we've got -- and all our modules come in virtual editions as well -- they're so far behind in that area.I'm not knocking on them so much as giving my opinion on the difference being so big between having a solution system and not having it.
You've talked in the past about how important your hiring philosophy --deliberate, careful hires especially among your top people -- is to preserving F5's culture. You haven't lost a lot of executives, at least compared to other companies. Were you surprised by [former F5 global head of sales] Mark Anderson's departure?
I was very surprised, and not happy. I don't mean personally unhappy -- he remains a personal friend -- but I didn't hide my reaction. I imagine things happening this week [Palo Alto's planned IPO] had some impact on his decision. But Dave [Feringa, former F5 America sales chief, who replaced Anderson] has been with the company for seven years and was in charge of 60 percent of our sales. It was just like when [Anderson predecessor] Tom Hull moved on, I promoted Mark. Now Mark's moved on, and good luck to him, and Dave's in. But the overall turnover with us is very, very low. It really is. Much as you don't like to see anyone leave, it does happen.
Any plans to add other executive-level positions at F5, like you did with Manny Rivelo?
We are filling Dave's position, and we had multiple candidates for that, so that shows you the bench strength. But I have been thinking. Manny's capability in security in terms of being cross-functional has been awesome. I have been pondering maybe a similar move like that.
PUBLISHED JULY 23, 2012