Cisco is ending development of its ACE application delivery controller, exiting a market in which it has seen its share decline as F5 and Citrix have gained.
Cisco Systems, which for more than a year has
been undergoing a transformation that includes shedding underperforming
businesses, reportedly will no longer develop its ACE load-balancer technology,
apparently ceding the market to rivals such as F5 Networks and Citrix Systems.
JMP Securities analyst Erik Suppiger wrote in
a research note late last week that Cisco officials had been telling salespeople
to stop promoting the Application Control Engine (ACE) 30 load-balancer module
for new deployments, though the networking giant will continue to sell and
service the product for existing customers.
"We believe Cisco's de-emphasis on selling
the ACE for new deployments is a more recent development that reflects more of
a shift away from the application delivery controller market," Suppiger
wrote. "Cisco has been losing market share in the ADC market for several
years, and we believe this will accelerate the company's share erosion."
Cisco this week confirmed its decision to the
media, with spokespeople saying it was part of a larger routine assessment of
product lines to see which are viable and which can be shed. Cisco's ACE
application delivery controllers (ADCs) are found in the company's Catalyst
6500 switches and 7600 routers, and offer a range of capabilities, from load
balancing to application acceleration to security. They become increasingly
important in virtualized and cloud environments, where the movement of
virtualized workloads is much more fluid.
Over the past few years, Cisco has seen its
share of the market drop as companies like F5, Citrix, Riverbed Technology and
A10 Networks have taken over. According to a Sept. 12 report from market
research firm Dell'Oro Group, the ADC market will grow to more than $2 billion
by 2016, with sales of virtual appliances fueling a lot of that growth. Revenue
from virtual appliances will jump from less than $50 million last year to
almost $500 million by 2016, according to Dell'Oro analysts.
"We also feel that F5, as the strong market
leader, will be well-positioned to capture a large portion of the share,"
Suppiger wrote in his research note. "Other players that may benefit include
the 2nd largest vendor, Citrix, which controls 16.8%. We also believe privately
held A10 Networks, which controls 6.2% of the market, is also well-positioned
to gain share from Cisco."
Some of these companies already are looking
to take advantage of Cisco's backing away from the market. A10 officials
announced Sept. 18 a program that offers Cisco ACE users up to $24,000 plus
installation and migration services for trading
in their Cisco products for A10's AX Series ADCs.
"With our ACE trade-in program, we are
making it both easy and cost-effective for customers to migrate to a solution
that will increase performance and flexibility for business services while
reducing total cost of ownership,"A10 founder and CEO Lee Chen said in a
F5 executives told news outlets that they
were planning to ramp up a migration program they already have in place.
Cisco has undergone a restructuring over the
past year after the company suffered through several quarters of disappointing
financial numbers, thanks in part to an aggressive effort to expand Cisco's
reach into new markets. Among the moves Cisco officials have made to streamline
the company have been shuttering businesses that were losing money or
underperforming, including much of its consumer offerings-such as the popular
Flip video camera-and the Android-based
Cius business tablet.