Tuesday, February 12, 2013

Riverbed Leaves Others in its Wake for Gartner Magic Quadrant for WAN Optimization Controllers

Gartner has released  their Magic Quadrant for Wan Optimization Controllers ID:G00219270.  Only three companies made it into the Leaders portion of the magic quadrant, Riverbed, Blue Coat Systems, and Silver Peak.  Gartner.  Riverbed led the other two companies by a great deal from the perspective of Completeness of Visionand Ability to Execute.  Silver Peak and Blue Coat were practically on top of one another with Citrix close by in the Visionary area of the Magic Quadrant.  and Ability To Execute.

Cautions for Blue Coat included stagnant revenue, being late with features, and management churn.  This makes it sounds as if their acquisition by Thoma Bravo for $1.3 billion in mid February 2012 has yet to payoff.  Cautions for Silver Peak Systems included lacking application specific optimization and lacking in some capabilities for mobile and home office workers.

Gartner praised riverbed for having the “broadest set of capabilities in the industry” and being one of the most innovative companies in the market.

Riverbed is currently trading at around $16.  Far off its high of around $30 in March 2012.  It bottomed out around $13.30 in July. Riverbed's financial report published in early February was mixed.  Total GAAP revenue for Q4’12 was $237 million, up 9% compared to the third quarter of fiscal year 2012 (Q3’12)   for the full year 2012, GAAP revenue was $837 million, up 15% compared to 2011 GAAP net income for Q4’12 was $5 million.  This compares with $20 million, in Q4, 2011.   

However, Riverbed  captured more than 52% share of the worldwide Advanced Platform WAN optimization market share based on vendor revenue for the third quarter of 2012 per Gartner’s according to Gartner’s  report titled “Market Share: Application Acceleration Equipment, Worldwide 3Q12” December 2012.

So the revenue trends are in the right direction.  Now about that reduction in net income?

Overall, with respect to their main competitors in the Magic Quadrant.  Their position is golden compared to Silver Peak.  Their growth in 2012 probably has Blue Coat singing the blues.  Riverbed is well positioned for 2013. 

How Do You Use A Gartner Magic Quadrant?

The below is from a Research Methodologies piece on utilizing Magic Quadrants.  Too often, a pic of the quadrant will make its way onto a slide deck with no explanation.

Clients use Magic Quadrants as a first step to understanding the technology providers they might consider for a specific investment opportunity.  Keep in mind that focusing on the leaders' quadrant isn't always the best course of action.  There are good reasons to consider market challengers.  And a niche player may support your needs better than a market leader.  It all depends on how the provider aligns with your business goals.
 The five other companies in the WAN Optimization Controllers Magic Quadrant are probably pleased about the above.

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