Arbor Networks' acquisition of broadband service optimization provider Ellacoya Networks reflects the accelerating trend of merging security with the digital services it protects.
The acquisition plan, announced Wednesday, brings together two vendors that aim heavily at service providers. Arbor's application-aware Peakflow appliances (both carrier- and enterprise-level) monitor networks for anomalous traffic, as well as attack signatures that indicate DDoS attacks, worms and bots. This technology has led them to branch into the network monitoring/management market as well, by correlating traffic data with network topology.
Ellacoya's e30 and e100 Platform deep packet inspection (DPI) switches enable carriers to manage broadband services down to the application and subscriber level. The bottom line is that they can make the most of existing bandwidth rather than simply buying more capacity as the loads mount, and can deliver highly individualized services to customers, said Gerald Wesel, chairman and CEO of New Hampshire-based Ellacoya.
"For example, you can prioritize time-sensitive applications, such as VoIP over a file download" Wesel said. "Service providers are looking to optimize revenue. They can offer a higher quality experience for customers--a personal Internet."
There are very strong synergies between the two markets that each company serves, said David Vorhaus, an analyst with the Boston-based Yankee Group.
"DPI is not designed for security enforcement. It can find problems and mitigate, but to take the next step that's really valuable is to work with someone like Arbor," Vorhaus said. "There's a lot of overlap. You have strong vendors who will work very nicely in partnership."
The companies had combined revenues of about $70 million in 2007, said Jack Boyle, CEO of Massachusetts-based Arbor, about two-thirds of that from his company. He anticipates that revenue would grow to $100 million this year. Boyle and Wesel said their customers require both service optimization and security to compete effectively. Vorhaus believes the DPI market will double annually for the year or two, as it did in 2007.
"Both companies are well known in the service provider market," Boyle said. "This allows us to create solutions customers they are looking for--it's a powerful play in marketplace."
They expect the combination will give them an edge over the competition in the DPI market, which includes Sandvine and Allot, as well as Cisco Systems (via its 2004 acquisition of P-Cube).
"There's already a 30% overlap in their customer bases, but the other 70% provides additional opportunity," Vorhaus said. "Arbor customers come to them and say we want more DPI,' and Ellacoya's customers say 'we want more security.' There's a realm opportunity to sell into each other's accounts."
In addition to offering both security and service optimization from one company, Boyle believes Ellacoya's technology will enable Arbor to extend its security capabilities.
"You'll be able to take it down to the application level, take advantage of the technology right down to the subscriber," he said. "If there is a security breach, you can see who is doing it and how it's being done, and determine action--block, remediate, quarantine—based on policy."
The companies plan to integrate their technologies, though they are still working on what forms that will take. Boyle says it's an evolutionary process, starting with loose, then deep integration, and perhaps, the option of a single appliance.
"We can now invest in areas and roadmaps we would not be able to do ourselves," Wesel said.