Blue Coat Systems today announced that it is buying one of its chief competitors, Network Appliance's NetCache product line, for $23.9 million in cash, plus 360,000 shares of Blue Coat stock.
The deal is another big one for Blue Coat, which secured $42 million in venture funding in order to make the buy. The company spent $60 million in January to buy security vendor Permeo, and the acquisition of NetCache plants Blue Coat squarely in a position to provide its combined proxy server/Web security/caching appliance to a wide range of enterprise customers. (See Blue Coat Puts On Acceleration.)
The deal is also a watershed for NetApp, which began as a caching/Web content delivery appliance maker but has focused mostly on the storage market in recent years. NetApp will continue to use some of the NetCache technology, which was part of its initial product warchest, in its FAS line of storage filer products.
"This divestiture allows us to sharpen our focus on data management solutions and services for the enterprise data center," said Jay Kidd, SVP and general manager of NetApp Emerging Products Group, in a prepared statement. "Over the long term, our NetCache customers will be better served working with a supplier who has a broader offering in the content delivery market and a strategic commitment to the Internet access, security, and proxy market."
Blue Coat is building its presence in that market with its proxy appliance, which combines traditional proxy server capabilities with caching, content filtering/delivery, and security management functions.
For security managers, Blue Coat is positioning the proxy as an intermediate device that can filter content to protect both the client system and the enterprise. Incoming traffic can be filtered for potential attacks and quarantined to protect the client. Outgoing traffic and queries can be filtered to prevent users from engaging in risky or unauthorized behavior.
The idea is to replace software-based proxy servers and a variety of caching and content filtering products with a single appliance that acts as the agent between users, applications, and content.
Blue Coat is also looking to replace its own initial offerings. It is preparing its users to move to Proxy SG, a new hardware platform designed to speed and secure application delivery. Both current users of Blue Coat content filtering/delivery hardware and users of the NetCache line will have to change hardware if they want to take advantage of Proxy SG's capabilities.
"Those customers would have needed to upgrade their hardware eventually, regardless of what we did," says Brian NeSmith, president and CEO of Blue Coat.
As for its newly acquired technology, Blue Coat will support the NetCache product in the near future and will make some incremental enhancements, but executives made it clear that the company is more interested in the NetCache customers than in the technology itself.
"These are customers that understand the power of the proxy," NeSmith says. "We believe that the proxy will be at the core of the emerging application delivery infrastructure, just as routers and switches were at the core of the IP network infrastructure."
Blue Coat will hire "less than a dozen" of the Network Appliance employees who worked on the NetCache product.
The Blue Coat executives did not offer much insight on their plans for interfacing the proxy products with storage systems, as Network Appliance did. Many of Proxy SG's benefits are the result of newly-designed hardware that would be more difficult to embed in storage systems, as Network Appliance did with the NetCache software.
The acquisition is expected to be complete within 90 days, Blue Coat officials say.
Tim Wilson, Site Editor, Dark Reading
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