Lustratus LiteBytes

Reactivity, a hardware XML gateway vendor,…

…has been snapped up by Cisco for what seems like a seriously large amount of money. Following on from IBM’s acquisition of DataPower in 2005 for a similarly large amount of money, it is clear that a high stakes game is being played here. High stakes because in both cases it would appear that the price paid makes little sense on the basis of the revenue these company’s may have been generating from sales.

The game started in 2005, when Cisco made a lot of noise as it launched Application-Oriented Networking (AON), a strategy to make the network smarter by adding functionality previously associated with middleware vendors. Rather than attempt to go straight into competition with the middleware vendors, Cisco correctly identified the enterprise edge (branch offices) as poorly served by existing middleware products. Hence, Cisco talks a lot about the service-oriented network architecture and focuses on the 40% of enterprises which it points out are branch offices. In line with this focus on the wider enterprise network, AON is very much a network virtualisation play. The underlying concept with AON is that you can easily deploy middleware like capabilities close to where you need it as part of your Cisco-based network infrastructure rather than in central hubs which are potentially far from where the functionality is needed.

All good strategic thinking in terms of Cisco’s strengths and an apparent gap in the market. Except that after an initial burst of interest, the buzz around AON disappeared pretty fast: As is reflected by the very fact that I felt the need to explain all of this because I am almost certain that few of the readers of this blog knew anything about AON. (And when I searched for AON on google, Cisco’s AON didn’t even make the first page.) However, this lack of visibility isn’t just about marketing dollars, it seems clear that commercially AON has simply not done what it hoped to do.

Which brings us back to the Reactivity announcement: Reactivity’s XML firewall and traffic monitoring technology will clearly help bolster (and quite possibly replace) AON’s existing technology.  And given AON’s focus, I don’t see this acquisition as particularly related to the mainstream SOA (or Web2.0) market as some commentators have suggested.

More fundamentally, I really don’t see that it will make much difference to the success of AON commercially in the short to medium term. This is simply because I struggle to see this market growing much for a number of years (5+). The primary reason I see the market so far out is that focusing on branches seems like a good idea, but it is a bit like focusing on the SME market: The reason why both are generally ignored by vendors is because branches like SMEs have less money and less ability to handle new technology: Branches simply don’t get the attention from the centre which has the power to allocate the budget required to buy this stuff and staff necessary to deploy it.

All of which means that if Cisco see this as a long term play in which Reactivity could be a stepping stone, well and good.  However if this is really meant to accelerate AON’s commercial success, expect another acquisition within a year as Cisco try again to reboot AON.

Ronan

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