The Riverbed Blog (testing)

A blog in search of a tagline

“…so what’s the story with Blue Coat?”

Posted by riverbedtest on December 22, 2009

I recently met with the CIO of a large Riverbed customer.  During the course of our meeting, the CIO mentioned to me how an analyst firm had recommended to him that they look at Blue Coat for WAN optimization.  Though they are a happy Riverbed customer, he was curious enough to accept some Blue Coat devices into their lab for testing and evaluation.  What his team observed was a very complex and difficult-to-configure Blue Coat product that significantly underperformed Riverbed.

The CIO gave me a puzzled look and asked, "so what's the story with Blue Coat???"  The analyst had told him that they were the "market leader" in WAN optimization, but according to his team who had tested them, Blue Coat's products were essentially unusable for their network, at least for WAN optimization.  I am aware of a number of other customers who were disappointed–even angry–with their poor, sometimes-disastrous experiences with Blue Coat WAN optimization functionality.

Blue Coat is widely known as a security vendor, but they have made some startling claims about being the "market leader" in the WAN optimization. At least one analyst firm has believed these claims, which belie recent events surrounding Blue Coat as a company, such as:

1)  Recent layoffs of at least 10% of Blue Coat's existing employees — It seems counter-intuitive that a "market leader" would be laying off employees just as the economy is coming out of a recession.  I would think that most market leaders would be hiring in order to maintain their leadership position during an economic recovery.

2)  Blue Coat moving 50 high-tech jobs to India — Blue Coat seems to be obsessed with cutting costs instead of expanding their product leadership.  Tragically, Blue Coat rewards the US employees who engineered their supposedly "market leading" WAN optimization products by moving their jobs overseas.  Perhaps the real reason for the cost cutting is because Blue Coat's WAN optimization capabilities just aren't achieving satisfactory levels of customer acceptance.

3)  Blue Coat's mandatory shut-down and vacation time for all employees in December — The WAN optimization market is very competitive.  But isn't Blue Coat jeopardizing their "leadership" by taking a break in a very competitive race?  If you were leading a highly-competitive marathon race, would you stop to take a coffee break?

4)  Blue Coat's 1% revenue growth in the latest quarterly financial report — Unusual for a "market leader," Blue Coat's financial performance is anemic compared to most other high-tech companies.  And this was during a quarter in which the US economy experienced 2.8% growth, according to the US Commerce Department.

5)  Blue Coat's CEO disclosing that pure WAN optimization represents "less than a couple percent of overall product revenues." — Blue Coat is the leader in WAN optimization, even though pure WAN optimization represents a very small part of Blue Coat's business.  Hmmm…something doesn't sound quite right with that statement…

The real story behind Blue Coat is that in 2006, they made ambitious plans to enter the WAN optimization market.  To spin their story and convince the market of their supposed leadership, Blue Coat uses sophisticated language such as "the Application Delivery Network (ADN)," terms that are meaningless to a hands-on IT professional, but impressive-sounding to casual observers.  But unfortunately for Blue Coat, the actual implementation of the WAN optimization features in their repurposed security product is a failure, and doesn't come close to achieving the eminence anticipated by their marketing team.  While Blue Coat maintains a healthy amount of business in their core security market, it appears their investments in WAN optimization have not panned-out, hence the need for cost-cutting.  What is now becoming evident is the disconnect between their marketing spin, and the reality of their failed WAN optimization efforts.

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