Silver Peak CEO Sees Validation In WAN Op Industry Notices

When researcher Gartner released its latest Magic Quadrant for WAN Optimization Controllers in late January, it confirmed what many solution providers already know: the WAN optimization market is becoming more closely watched than ever thanks to WAN op technology's role in data center optimization and cloud computing.

One of the vendors that stands to benefit most from that shift is Silver Peak Systems, which Gartner placed in its "Leaders" category for WAN optimization for the first time as it moved other vendors, such as Cisco, into lower categories.

Rick Tinsley, Silver Peak's CEO, sees the move as validation for Silver Peak's strategy to focus on data center-class WAN optimization and also target the growing interest in virtualized WAN optimization appliances from large enterprise customers.

"We approach WAN optimization from a different perspective," said Tinsley in a recent interview with CRN. "When we started with this strategy several years ago, we were a voice in the wilderness and Gartner really questioned our strategy then. But data center customers are leveraging virtualization and that's our value proposition to both partners and customers."

[Related: 15 WAN Optimization Players VARs Should Know ]

Silver Peak was founded in 2004, and about 98 percent of its revenue now goes through indirect channel partners, Tinsley said. The company has seen the most uptake among storage-oriented channel partners and also the OEM partnerships it forged with major storage vendors such as EMC, Hitachi and Dell.

"A few years ago, none of our competitors were using WAN optimization as a way to optimize storage applications," Tinsley said. "So I think we got a pretty good uptake from those storage vendors, and their channel partners who were really strong on storage or had good storage practices. The more traditional networking resellers were a little slower to recognize our value but they've started to see Silver Peak emerge as a viable contender as WAN optimization deals become more mainstream."

Silver Peak has a full line of physical WAN optimization appliances under its NX-Series line, but its VX-Series and VRX-Series virtual appliances are gaining traction since they were introduced in 2011. About 10 percent of Silver Peak's WAN optimization product sales are virtual versions, said Tinsley, and the company expects that percentage to be as high as 50 within two years.

In its WAN optimization report, Gartner highlighted Silver Peak's leadership in data center-to-data center optimization as key to is growth, as well as its international expansion over the past year and its alliances with storage and data center infrastructure vendors.

"Use Silver Peak when data center to data center performance is critical and in branch to data center networks when UDP traffic and operation across error-prone links are important factors," Gartner advised.

Silver Peak's move to the Leaders quadrant was one of several interesting vendor shifts cited by Gartner, which also moved Cisco down into the Challengers category and dropped Juniper outright.

Next: Focusing On WAN

Tinsley agreed with Gartner's assertion that the WAN optimization market would become increasingly crowded as smaller, startup-type players like Certeon came on radar, but said Silver Peak's strategy to focus on data center deployments using both physical and virtual product offerings was the right one.

"For 15 years, WAN op has been largely about acceleration in branch offices, but we're now seeing a lot more enterprise-wide deployments versus selective, band-aid type deployments," Tinsley said. "Large enterprises are really comprehending how WAN optimization can be used not just for a few branch offices greasing a few secondary wheels but also to be part of the standard networking plumbing. Not everyone is ready for that but the early adopters are here and it's going to become a mainstream market."

It's not Silver Peak's strategy to attack the channel bases of Riverbed or other WAN op players like Blue Coat, he explained, so much as it is to build additional resources into its existing channel partner base and leverage its various OEM partnerships, from EMC to Avaya. More VARs are cottoning to the model of selling subscription-based WAN optimization software, Tinsley said, where customers are offered an annual license instead of an up-front perpetual license.

"It's more attractive to some partners to buy a service from their supplier and then sell that service," he said. "It's been important to us to take advantage of alternative pricing models."

Silver Peak will stay focused on its core WAN optimization markets, Tinsley said, and not look to acquire or build in adjacent technology areas like Riverbed has done, at least in the short term.

"We're growing faster than the market at present," Tinsley said. "Other established players -- big networking companies like Cisco and Juniper -- have clearly underinvested in this space. It's a small business to people like them, but it's big business to people like us. We're comfortable that the trajectory we're on is the best strategy that matches up to large enterprise customers."