Blue Coat Picks Up Packeteer

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Blue Coat is acquiring competitor Packeteer for $268 million in a deal that unites two players in the fast-growing market for WAN optimization and acceleration, which Infonetics predicts will be worth $1.2 billion by 2010.

The combined Packeteer Blue Coat offering will provide additional acceleration capabilities to Blue Coat’s product portfolio.

“The reason behind this is primarily to take advantage of technology that is within the Packeteer Packet Shaper product in particular, that includes application classification as well as traffic management functionality,” said Bethany Mayer, Blue Coat’s senior vice president of worldwide marketing. “Those capabilities … and that is technology that we think provides us with a strong advantage in WAN optimization.”

Mayer said Packeteer has a strong channel and sales organization that will also benefit Blue Coat.

Blue Coat will also get Packeteer’s WAFS technology acquired from Tacit Networks two years ago for $78 million.

Blue Coat already offers application acceleration, but Mayer argued that Packeteer’s technology goes above and beyond what Blue Coat currently does on its own.

“We do offer application acceleration, quality of service, caching security and compression as well,” Mayer said. “The Packeteer quality of service capabilities that they have are just very granular and very deep and beyond, frankly, what anyone in the industry offers today.”

Mayer said Packeteer can classify more than 500 applications and has numerous patents on its technology. Application identification is a key enabler of WAN optimization and one that others in the industry, including Riverbed and Juniper, also focus on.

Mayer said the combined Blue Coat Packeteer offering will give Blue Coat a competitive edge. Mayer said the requirements for WAN optimization are changing, as the trend shifts from accelerating everything to a more granular approach where users first identify applications to accelerate.

Mayer expects that over time, the Packeteer brand itself will be consolidated into Blue Coat. In the short term, Packeteer products will continue under the Packeteer name and Blue Coat will continue to add features to the Packeteer product line.

Blue Coat’s WAN acceleration lineup is something Mayer expects to see continue to grow this year and beyond.

“Folks are still doing server consolidation as a part of cost savings and the market is still evolving,” Mayer said. “But we’re selling WAN optimization in a broader sense in the enterprise. Instead of it just being a pilot, generally now they are full-fledged deployments.”

Blue Coat expects the deal to close in the second quarter. It is being funded by a combination of Blue Coat’s cash and an $80 million convertible notes financing.

Article courtesy of

Sean Michael Kerner
Sean Michael Kerner
Sean Michael Kerner is an Internet consultant, strategist, and contributor to several leading IT business web sites.
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