Blue Coat To Buy WAN Optimization Vendor Packeteer


The $268 million buy will add 1,400 new channel partners and 10,000 new customers for Blue Coat, said CEO Brian NeSmith. The deal is expected to close in this years' second quarter.

NeSmith said he hopes the move will "reinvigorate" Packeteer's PacketShaper line of WAN optimization tools, which he said have not been adequately invested in. He said Blue Coat will be able to add Packeteer's QoS, traffic management and application classification functionality into its products. The complete integration of PacketShaper into Blue Coat's ProxySG is expected to be complete by late 2009, with phased upgrades beginning before that, boosting ProxySG's application understanding and traffic prioritization capabilities.

All told, the acquisition will give Blue Coat increased penetration in the WAN optimization market with Packeteer's global sales distribution channel combining with Blue Coat's existing channel. NeSmith added that the buy will grow Blue Coat's sales opportunities through cross-selling to new Packeteer customers.

NeSmith said the move will give VARs an expanded product offering and enable them to gain increased discounts and rewards, while boosting their margin potential. He said Blue Coat will develop joint marketing opportunities, as well.

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"Combining our two partner programs there's going to be a lot of potential there for partners to get increased benefit," he said.

Joseph Dell, president and CEO of Lightwave Security Inc., an Atlanta-based solution provider, said the acquisition of Packeteer will compliment Blue Coat's existing offerings and add a new level of bandwidth management, something customers historically said Blue Coat was lacking.

"That's going to be interesting," Dell said, adding that Packeteer's focus on WAN optimization had VARs selling it into the infrastructure side, while Blue Coat was often positioned to the security side because of its policy-based control mechanisms and user visibility tools, and also its Secure Web Gateway solutions. "I'll be interested to see how this shakes out."

Dell said the pairing opens up new opportunities for VARs. He said Packeteer had been somewhat ignored in the market and had only a small channel. Because Blue Coat is a 100 percent channel-focused vendor, more people will have exposure.

"It's a unique market opportunity," Dell said.

Currently, Packeteer has more than 50,000 units deployed. Packeteer offers network traffic prioritization and shaping tools that identify applications over the WAN. The combination of Blue Coat and Packeteer solutions will add a new level of application intelligence to Packeteer's existing portfolio, NeSmith said.

NeSmith said he foresees Blue Coat extending Packeteer's application classification ability to add increased management around it, essentially adding traffic performance management into the mix, something MSPs can offer as a service.

"WAN optimization is the starting point for adding the next layer of intelligence to the corporate network," NeSmith said in a statement. "The acquisition of Packeteer will enable us to extend our leadership in solving branch office application performance challenges and addressing security threats by adding an extensive, experienced sales channel, integrating our sales organizations and by reinvigorating the well-regarded PacketShaper product and adding it to our solution set. At the same time, we will begin to aggressively integrate Packeteer technologies with our own to continue building the next critical layer above the router."

Dave Cote, Packeteer's president and CEO, agreed.

"We believe our customers and channel partners all benefit from this move which results in having a more comprehensive solution for solving the application delivery challenges through advanced application discovery and the intelligent prioritization, security and control of business traffic across the WAN," he said in a statement.

Dell said he sees Blue Coat's purchase of Packeteer as a sign of more acquisitions to come.

"There's going to be a ripple effect," he said. "There's been sort of a dark cloud over this industry, because you have Riverbed " the leader " and then everyone else. I wouldn't be surprised if this is the catalyst for more acquisitions. My prediction: this is the first of many over the next couple of months."