Arbor Acquires Ellacoya, Strengthens Service Provider Offerings

| Jan 18, 2008 | Enterprise Security | Competitive Intelligence Report

| Analyst: Andrew Braunberg

Current Perspective: Very Positive
Vendor Importance: High
Market Impact: Low/Moderate

Event Summary

January 17, 2008 – Arbor Networks, a provider of secure service control solutions for global business networks, has announced that it has signed a definitive agreement to acquire Ellacoya Networks, a provider of carrier-class broadband service optimization solutions. Terms of the transaction were not disclosed.

Analytical Summary

• Current Perspective: Very positive on Arbor’s acquisition of Ellacoya, because it needed to grow beyond its roots as a pure play network behavioral analysis (NBA) vendor. With this acquisition, the company gains important technology for addressing the broader service control market as well as picking up a strong customer list and important channel partners.

• Vendor Importance: High to both companies, because this deal significantly expands the size and reach of Arbor while providing it with technology and expertise to make it an even stronger player in the service provider segment of the market. Ellacoya ceases to exist as an independent company but finds a strongly complementary home at Arbor.

• Market Impact: Low to moderate on the NBA market, because it has been clear for some time that Arbor intended to strengthen its position in the service provider market and to grow beyond its NBA roots. This acquisition furthers both of those goals nicely. It is a further indication that NBA should be viewed as a feature, not as a stand alone product.

Recommended Competitor Actions

• Arbor’s traditional NBA competitors should position this deal as “proof” that Arbor is abandoning the enterprise market and will focus all of its attention on the service provider market. These vendors should attempt to migrate Arbor’s enterprise customers.

• Ellacoya’s chief pure play competitor, Sandvine, should position this deal as a response to its acquisition of Simplicita. In other words, Ellacoya desperately needed a security story. Sandvine should question Ellacoya’s decision to turn to a NBA vendor, however, because that technology is becoming somewhat of a commodity.

• Allot Communications, another Ellacoya competitor, should emphasis its partnership with Juniper Networks, announced last summer. Allot has integrated its DPI devices with Juniper’s SDX-300 policy management platform. That technology partnership can leverage Allot’s Service Gateway solution, which supports security services including IDP and URL filtering.

Recommended End User / Customer Actions

• Existing Arbor and Ellacoya service provider customers should be pleased with this announcement. The companies have very complementary technologies and in combination will deliver a very complete service control system.

• Existing Arbor enterprise customers should be a bit more circumspect about this deal. These customers should look to Arbor for assurances of continued product and service support.

CLIENTS ONLY

Current Perspective

Competitive Positives and Concerns

Recommended Vendor Actions

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