F5 to buy Brocade’s virtual ADC business?

The latest piece of the Brocade IP product suite hanging in the balance

F5 Networks is said to be lining up to acquire Brocade’s virtual Application Delivery Controller (ADC) business, the latest hunk of Brocade’s IP suite to be sold off to meet the terms of Brocade’s $5.5 billion acquisition by Broadcom, a deal announced last November. Brocade sold its Ruckus Wireless and ICX Switch business to Arris International in February for $800 million.

The latest divestiture -- reported by companies contacted by the private equity firm shopping the ADC asset -- is said to involve Brocade’s Virtual Traffic Manager, formerly known as the SteelApp Traffic Manager.  Brocade had acquired the technology from Riverbed in 2015 for an undisclosed fee, and Riverbed itself had acquired the tech from Zeus Technologies in 2011 for $140 million.

Sources say Brocade has “20-30 good size customers” for the Virtual Traffic Manager, driving a run rate of round $30 million.

Although F5 offers software versions of its ADC which can be spun up as virtual machines, the bulk of the company’s business – fiscal first quarter revenue of $516 million reported in January – stems from the sale of its Big-IP ADC hardware, so this software-only product would be a departure, and a good one according to Zeus Kerravala, founder and Principal Analyst with ZK Research.

“F5 has been slow in developing a virtual ADC,” Kerravala says. “I think this would be a good fit for them.” 

Others question how much it would benefit F5. 

The source of the rumor, who requested anonymity, says “we’re seeing software replacing hardware ADCs, so this would be a recognition by F5 that this is happening.”  But in terms of it giving F5 a boost?  “It would be too little too late because this is old technology that isn’t well suited for cloud, containers and automated environments.”

EBSCO Information Services is one company that tried to use an existing hardware based ADC when it moved to an OpenStack environment and started down the path to automation.  That proved too complex for developers, so the company considered a VM version of the same product: “All it did was shift the problem,” says Enterprise Architect Nate Baechtold.  “The only way it helped us was to say, ‘Okay teams, now you configure and manage your own virtual load balancers.’ They weren’t too happy with that because it added complexity.”  (See the full explanation/interview here.)

EBSCO eventually turned to a software ADC from Avi Networks that integrated neatly with the company’s private cloud, simplified the job of automation, and wound up being considerably cheaper than our existing solution because it didn’t rely on proprietary hardware; we are just paying for the software, and it is scaling on the same x86 virtualization platform all of our systems are running on.”

Kerravala says a lot of the market growth is going to be around software, but he doesn’t believe software ADCs will cannibalize hardware sales:  “I think software opens up new use cases -- developers could use it to see how things work, or I can expand into another part of my data center without buying more ADC hardware.  I think it expands the overall market.”

Brocade and F5 refused to comment on the rumor.

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