Silver Peak Bets Big On Virtual WAN Op With New Customer Upgrade Program

Silver Peak Systems has launched a new program that allows customers to upgrade from its hardware-based WAN optimization appliances to its virtual appliances free of charge. The program, announced Monday, represents the latest step by Santa Clara, Calif.-based Silver Peak in its transformation from a hardware- to a software-focused WAN optimization player.

The upgrade program is also the first major announcement to emerge from Silver Peak under new CEO David Hughes. Hughes, the original founder of the company, took the helm in June, following the retirement of former CEO Rick Tinsley.

After launching Silver Peak in 2004, Hughes tapped Tinsley for CEO of the company, and took on a role as CTO to focus more on Silver Peak's technology. Now, as CEO, Hughes has charted an aggressive course for Silver Peak, in which the company's focus will shift almost entirely from WAN hardware to virtualized network services.

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Hughes said Silver Peak's new focus on software is a result of the growth it's seen with its VX-series line of software-based WAN optimization solutions.

"About two or three years ago, we introduced a virtual appliance, a software version of the product. Starting from one product, we expanded that to a full range of products, going from the low end all the way to the high end in terms of performance," Hughes told CRN. "Over the last two years we have seen a dramatic shift in the uptake in the software version of our product. We have gone from 100 percent hardware to, basically, more than 50 percent software now in terms of what we are selling from the point of view of units."

Hughes attributed this growth to the fact that Silver Peak's virtual VX-series delivers the same data replication functionality as Silver Peak's hardware-based NX line, but through a software-based model that is easier to deploy and offers greater flexibility in terms of both use and cost.

"It's been a very fast shift that, I think, has exceeded even our expectations," Hughes said. "And what's really driving that is that software is really, really compelling for our customers."

Apart from being faster to deploy and upgrade than hardware-based WAN appliances, one of the things customers like most about the virtual VX-series, Hughes said, is the more flexible pricing model. One recent example of this is Silver Peak's new partnership with Amazon Web Services (AWS). Announced in June, the deal makes Silver Peak's WAN-optimizing Virtual Acceleration Open Architecture software available by the hour directly from the AWS marketplace.

Customers can access the software in a variety of network capacity options, as well as through annual or perpetual licensing, using -- and paying for -- only what they choose.

Hughes said it was too early to disclose how many customers have accessed Silver Peak's software via AWS, but said he expects the offer to take off.

"With software, we're able to do very interesting things with pricing, doing things like subscription-based pricing where people pay by the year, or usage-based pricing, say, in conjunction with Amazon, where they can buy WAN optimization by the hour," Hughes said. "Things like this, they are familiar concepts for software companies. But it's a new thing in networking. And what's been really exciting is to see how quickly people are embracing these options."

NEXT: Silver Peak's Upgrade Program

Silver Peak's new upgrade program is meant to accelerate both its own, and its customers', transition to software-based WAN appliances. The program works by allowing any Silver Peak customer to upgrade their WAN optimization hardware to an equivalent Silver Peak virtual software product for free.

Specifically, the deal allows any customer with a valid maintenance contract for Silver Peak's NX-series hardware to move to an equivalent model within the virtual VC-series line. It's not a trade-in program, Hughes noted, meaning customers don't have to send their hardware appliance back to Silver Peak to qualify. Instead, they just log onto Silver Peak's support portal, and register for the program through a link that says "Convert to Virtual."

"This is really Silver Peak putting our money where our mouth is in terms of really wanting to partner with our customers and help them through this transition," Hughes said.

Silver Peak's big bet on software is backed by industry research. Dell'Oro Group's recent Data Center Appliance Report, for instance, projected the virtual WAN optimization market to grow 100 percent in 2013, while the overall WAN market is only expected to grow 6 percent.

Silver Peak's VX-series line can run on standard x86-based servers and supports hypervisors, including VMware's vSphere, Microsoft's Hyper-V, Citrix XenServer and KVM. The line today ranges from the lower-end VX-500, which Silver Peak said is optimized for smaller networks and delivers up to 2 megabits per second (Mbps) of throughput, to the higher-end VX-7000 for data centers, regional offices and disaster recovery (DR) sites, which can accelerate throughput up to 200 Mbps.

Overall, Silver Peak says its virtual appliances allow customers to transfer data up to 90 times faster than they could in existing infrastructures.

Silver Peak sells almost entirely through the channel, and staged an overhaul of its partner program in late 2011. Called Silver Peak Champions, the program offers gold and platinum partnership levels, both of which have access to field resources, sales enablement and marketing tools.

Hughes said Silver Peak's new focus on software aligns with the channel's own shift toward virtualized network services and software, as seen through the burgeoning software-defined network trend. What's more, he said a lot of Silver Peak's solution provider partners have roots in the storage industry, which is also gravitating toward virtualization.

"If you look at a lot of our channel, there is a slant toward storage. Often, our solution is sold as a way of accelerating replication or reducing backup times, so, often, the use case goes hand in hand with a storage problem," Hughes said. "And what we've seen is that the storage channel is pretty in tune to what's going on with virtualization and pretty open to deploying software solutions."

Despite this new shift toward software, Hughes said Silver Peak will continue to support its legacy NX-series line of hardware. He also said he will likely act as the company's CEO for the next "year or two" as it continues with this transition.