Blue Coat Systems plans to beef up the XML security capabilities on its appliances in mid-2008, with further functionality being added over the next couple of years, according to CEO Brian NeSmith.
He acknowledged that Blue Coat’s entry into the optimization/acceleration space since early 2006 with its MACH5 technology has had a benefit to its top line. Our revenue split is now just over 50% security and just under 50% what we call WAN application delivery, which includes optimization/acceleration, CDN, video and some other things, said NeSmith. However, two-thirds of our WAN app delivery business are also using our security, so it gets muddy.
In any case, NeSmith argued, differentiation will become more and more difficult in optimization/acceleration. It’ll become a commodity that every vendor will do, said the exec. After all, you can store data locally, remove protocol inefficiencies and do bandwidth management, and that’s about it.
NeSmith recalled Blue Coat’s own experience in its former life, as CacheFlow. We went through this in the caching market. We improved a customer’s bandwidth utilization by 35% when the competitor improved it by 33%, but it didn’t matter, and it didn’t justify a price premium.
With differences shrinking between one optimization/acceleration vendor and another, he went on, it will be our security offering that will make the difference. At the moment, said NeSmith, Blue Coat’s CDN and video capabilities are also differentiators, but only until Riverbed can do them. In the long term, however, it will be our abilities in things like policy control.
Over the next couple of years, security will reassert itself as the factor why people will buy our products, what with the trends toward SaaS and Web 2.0, and the growing adoption of SOAP and XML.
Blue Coat threw its hat into an already crowded space when it unveiled its MACH5 technology at the beginning of 2006. Intelligently, it offered it as an add-on to its existing appliances, which meant it already had an installed base of security customers as its low-hanging fruit. It also put it on the radar of service providers like Orange Business Services that were already offering the a managed ProxySG service for security, and the company’s top line has registered a positive impact.
Interesting, then, that despite optimization/acceleration’s positive contribution to revenue and the fact that it has raised Blue Coat’s profile in the market as a whole, NeSmith sees security as the flagship technology on which his company’s future depends.