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Partners Worry About Riverbed's Future After It Sells SteelStore To NetApp

They love Riverbed's solutions and support, but the company's channel partners are concerned about the future if Riverbed gives into investor pressure to sell itself.

Riverbed Technology in public appears unconcerned about pressure from one of its investors to sell itself or explore other strategic options, but attendees of this week's Riverbed Force conference said they worry about the potential consequences of such an action.

At this week's Riverbed Force conference, Riverbed's top executives, including CEO and co-founder Jerry Kennelly, did not use their keynote presentations to discuss the moves by activist investor Elliott Management, which in January made a $3.1 billion bid to acquire the company.

However, Chief Sales Officer Paul Mountford told CRN to remember that the San Francisco-based company is not receiving pressures from investors, but instead from only one investor.

[Related: Riverbed: Visibility, Automation Key To Hybrid Networks, Hybrid Clouds]

"It's one investor who makes these kind of plays his business," Mountford said. "He's also pushing other companies including EMC and Juniper Networks."

Fundamentally, regardless of whether Riverbed is a public or private company, nothing really changes, Mountford said.

"The technology is the same," he said. "To customers and partners, there would be no change. Elliott [Management] sees Riverbed as having a huge amount of potential. However, it takes a long while for any changes to be made."

Riverbed, however, is already changing as an organization.

In response to mounting pressure from Elliott Management, Riverbed in mid-October said it is restructuring its business, trimming costs, and starting to explore other strategic and financial options.

Furthermore, Riverbed late last month sold its SteelStore backup appliance to NetApp for $80 million. Riverbed executives would not comment on whether that sale stemmed from investor pressure.

However, at least one solution provider thinks that may be the case.

Johan Nilsson of Rebendo Konsult, a Sweden-based solution provider that started working with Riverbed after its 2012 acquisition of Opnet, with which Rebendo previously partnered, said there is always concern when there is investor pressure to change a vendor partner.

"I'm not that surprised to see the investor pressure," Nilsson told CRN. "We've already seen the first step, which is Riverbed selling SteelStore to NetApp. Now we're waiting for the strategy."

The SteelStore line probably brought relatively little revenue to Riverbed, Nilsson said. "It seems Riverbed did the sale to buy itself time to work on its strategy. It can go back to investors and say, 'See? We sold that part.' "

NEXT: Partners, Users Worry About Fallout From More Riverbed Changes


Rebendo's Nilsson said his primary concern should Riverbed be sold is who the buyer would be. "We're a big Cisco shop," he said. "What if [Riverbed's] SteelHead ends up anywhere other than Cisco? We'd lose it."

One U.S. solution provider told CRN under condition of anonymity that the biggest concern should Riverbed change hands is the question of what would happen to the company's technical support.

Riverbed has a great support team, the solution provider said. "When we need to talk to them, they're there for us," the solution provider said. "They appreciate our efforts to try to solve issues, and are there to help after we have done everything we can."

That kind of support is key for customers, the solution provider said. "We have to deliver technology with excellence," the solution provider said. "We have to look at the support customers have after the deployment."

One Riverbed user, meanwhile, already has reported fallout from Riverbed's sale of its SteelStore appliance to NetApp.

The user's company had made a substantial investment in SteelStore only to see that product line now go to a vendor it currently has no relationship with, and is now looking at doing more with Riverbed's SteelApp line. And that, the user said, is cause for concern.

"I like Riverbed a lot," the user said. "My concern is, if we invest in SteelApp, will we be told a few months later that it was sold to Citrix? If Riverbed sells itself or the SteelApp line, what do you tell your CIO after the company invested in the solution?"

PUBLISHED NOV. 7, 2014

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