Peak performance

When Max Goldsmith and Nathan Chan look across the WAN optimisation market, they see an opportunity that is wide open.

Goldsmith, CEO at reseller XSI Data Solutions, and Chan, senior networking engineer, have started tapping into a market that is set to explode, bringing improved application performance and lower costs to customers linking branch offi ces and remote users to headquarters over a wide area network (WAN).

It is an idea encapsulated by a common marketing catchphrase: providing LAN-like performance over the WAN.

Along with their partners, vendors are frantically vying for a piece of the action as well, clamouring for a share of a market that research firm IDC expects to hit US$314 million this year and nearly US$611 million by 2009.

The latest salvo comes from Juniper Networks, which is taking a crucial step towards getting its recently acquired WAN and application acceleration appliances into partners’ hands with the launch of a new specialisation program around the technology.

Cisco Systems, meanwhile, is also grabbing for a bigger play, recently creating a new Application Delivery Business Unit and launching new products based on technology from several recently acquired optimisation vendors.

Eight months ago, XSI started selling WAN optimisation products manufactured by Peribit, which is now Juniper-owned. It also sells Allot bandwidth shaping products.

"We’re now at the stage where we are getting good installations and customer relationships," says Goldsmith. "It’s starting now to become good business and I think over the next year or so, it will become a better business." The reseller already has around 25 sites using the technology.

Last financial year, XSI sold about $4 million worth of Peribit WAN optimisation products across large sites.

"This year we’ll get up to $6 million or $8 million. In our $40 million turnover, it’s somewhat significant." XSI is Juniper’s only Elite certifi ed partner. For 20 years, XSI has been a storage-focused reseller and the addition of WAN optimisation products gives it another string to its bow.

"You’re seeing this stronger and stronger acceptance of data security and offsite backups.

"Having been one of the leading people in the backup market for many years, one of the issues with offsite is that users would love to do it offsite but [due] to the cost of the bandwidth, it just doesn’t work, it’s a nightmare. So this tends to resolve that issue," he says.

Goldsmith is adamant the technology works well but in the past customers have been apprehensive about claims relating to the performance of WAN optimisation.

All companies that have issues with bandwidth are potential customers and the ROI can be anywhere between three and six months, he says.

XSI’s Chan says the Peribit gear gives customers an average of around four, five or six times the throughput across networks. "We have a site between here and Japan — they run a 20Mb/s link and it’s sitting at 80Mb/s throughput across the network.

"That’s from here to Japan, where normally latency across that link would have a maximum throughput of maybe 1Mb/s or 2Mb/s even with a 20Mb/s pipe," he says.

Chan says that WAN optimisation completely gets rid of latency because they actually remove TCP from the WAN and run their own reliable data transport protocol. Companies that have long distance links between Perth and Sydney and overseas links can take advantage of the technology where latency is quite high.

"Even smaller links [can benefit]. We just did a site recently which had 64Kb/s links between here and other sites and even over into Papua New Guinea. Those 64Kb/s links are completely flooded with mail traffic are now getting equivalent to 256Kb/s. They are actually bursting up to 1Mb/s," Chan says.

Goldsmith agrees that a lot of resellers misunderstand this technology. "This way, we add genuine value," he says. Margins are around 20 percentage points, with the bigger bucks being generated through support, Goldsmith says.

WAN optimisation installations are extremely easy, Chan says. "It sits between the router and the switch so you literally unplug a cable and put a new cable in and everything is configured from one site. As long as all the boxes are plugged in line between different locations and you have a central management server, it picks up an IP address, connects back to the server, [asks] what confi guration it should have and bang, it’s up and running.

"You could deploy a whole 35 sites, and the length it takes to deploy it depends on how long it takes to plug the boxes in," Chan says.

Understandably, vendors and distributors too see great potential in WAN optimisation technology.

Brian Allsopp, regional manager A/NZ at Juniper Networks, says that Australia is a suitable market for WAN optimisation products due to the high cost of bandwidth.

WAN optimisation is Juniper’s highest growth market at the moment and a technology that customers want to talk about. Juniper acquired WAN optimisation technology from Peribit and Redline. "It’s a tool the affects the business user. Out of all the technologies that we sell, this one has the most profound affect on a business."

One big trend that is driving growth in WAN optimisation is companies consolidating their server infrastructure and applications to single locations, Allsopp says. "As that consolidation happens, they are really buying into placing this type of technology," he says.

In the past, companies tended just to throw more bandwidth on their networks as they started to get sluggish.

Allsopp claimed that the WAN optimisation market in Australia was worth US$23 million in FY2005, at an 87 percent growth rate.

And there are plenty of margins to be had for resellers selling WAN optimisation. "There are fantastic margins. The feedback we get is that it’s a compelling ROI, it’s a compelling technology and there’s good reward in it," Allsopp says.

Throughout November, Juniper held its first round of WAN optimisation technology training in Sydney, training 50 engineers across the technology with more reseller training to follow.

TechPlus Distribution has been moving WAN optimisation products from the likes of Exinda and Allot to the reseller channel for several years. But lately the market has been heating up, according to Paul Kern, managing director at the distributor. While the market is becoming more aware of it, people are still assuming that the way to solve and bandwidth problem is to throw more bandwidth at it, he says. And "it doesn’t matter how many times you tell them not to keep doing that," he says.

Bandwidth-critical applications such as VoIP are driving growth. "For example, if you don’t address how bandwidth is being utilised, VoIP won’t work," Kern says. Resellers still do not get it, he says. "I don’t think resellers have understood or got involved with bandwidth management," he says, adding that many resellers are not actively going out and selling it.

"They’ll take an order for it but haven’t understood how to sell it or why to sell it," he says. "Not a lot of resellers understand so the margins are pretty good — in the 20 plus [points] range on hardware plus the ability to add in services," he says.

Distributor Dovetail moves AscenLink WAN load balancers, which range in price from $5000 to $40,000. It would sell 10 to 15 of the smaller load balancers per month and one or two of the larger ones, according to national sales and marketing manager John Poulter.

Dovetail has been moving these products for around eight months and while it is still early days, Poulter says the problem at the moment is getting end users to realise the savings that they can make. "But when they evaluate it, they fi nd out that it is that good," Poulter says.

Dovetail resellers were interested in the technology and expected the market to grow rapidly pretty soon, he says. Reseller margins on the AscenLink products were above 25 points, "much better than a firewall," he added. The AscenLink gear competed against similar products manufactured by the likes of F5 and Radware at half the price due to the lack of brand awareness, Poulter says.