Brocade Beefs Up Data Center, Service Provider Portfolio With Riverbed SteelApp Acquisition

Brocade said Thursday it plans to acquire Riverbed Technology's SteelApp product line in an all-cash transaction, including assets of the SteelApp business unit as well as personnel.

Terms of the acquisition weren't disclosed. Brocade said it expects the deal to close in the second quarter of fiscal 2015.

SteelApp is a virtual application delivery controller (ADC) that Brocades touts as providing scalable, secure, and elastic delivery of enterprise, cloud and e-commerce applications.

Ashwin Krishnan, head of products for Brocade's software networking business, told CRN that SteelApp is the perfect addition to Brocade's software portfolio and aligns with the trend towards Network Functions Virtualization (NFV) and Software-defined networking (SDN).

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"This was a perfect acquisition in terms of acquiring people who have extremely strong software backgrounds," Krishnan said. "It made perfect sense."

Research firm Dell'Oro reports the ADC market is worth nearly $2 billion, with virtual ADCs growing 30 percent compared to only 1 percent for hardware ADCs.

Jamie Shepard, senior vice president of strategy and health care at Lumenate, a Dallas-based solution provider and Brocade partner, said SteelApp will improve sales by helping customers.

[Related: Private Equity Blockbuster Riverbed To Be Acquired For $3.6 Billion]

"SteelApp can certainly address several challenges that customers are faced with now moving to a more hybrid cloud approach," said Shepard. "The acquisition definitely will move any Brocade channel partner that did not sell a lot of IP (Internet protocol) and focused more on FCC (fiber channel connectivity) into a more strategic role within their accounts if they build out their engineers and messaging properly."

SteelApp will enable more advanced solutions for the company's data center and service provider customers, Krishnan said. Brocade needs channel experts who are focused on learning the specialized skillset required to sell virtual ADC, which can be difficult, he added.

"This is a really good opportunity for the whole channel … to retrain themselves to be able to sell virtual ADC into the enterprise," Krishnan said. "We see that as an avenue where the channel can play a big part in picking up the specialized knowledge needed for selling this piece of software."

Chris Becerra, president and CEO of Terrapin Systems, a San Jose, Calif.-based solution provider and Riverbed partner, said his company is also focused on SDN, NFV and virtual ADCs.

"We see a huge potential here and we're currently educating our customers and prospects on the technology," said Becerra.

In October, Riverbed similarly sold its SteelStore appliance business to NetApp for $80 million.

In December, Riverbed said it was set to be acquired for $3.6 billion in cash by two private equity firms – Thoma Bravo and Teachers' Private Capital.

Despite these developments, Shepard said he is not concerned about Riverbed's future because the vendor still has strong industry alliances.

"I feel that they are moving to more of a focused approach and will be in a better position to address that focus and to help accelerate growth," said Shepard.