If you think WAN optimization is a niche market, don't bring it up around Jerry Kennelly. Co-founder, chairman and CEO of Riverbed Technology, Kennelly is a fervent believer that WAN optimization is the foundation for the next generation of IT infrastructure and that Riverbed is poised for a dominant role not only in corporate data centers but in the cloud as well. Since its founding in 2002, Riverbed (RVBD) has become the leader in WAN optimization (according to consultancy Gartner), and it continues to grow at a rapid clip -- as in 39% year-over-year revenue expansion in its first fiscal quarter ended June 30. In this installment of the IDG Enterprise CEO Interview Series, Kennelly spoke with IDGE Chief Content Officer John Gallant and Network World Senior Editor Tim Greene about battling with Cisco, the expansion of Riverbed's product line and big opportunities in the cloud.
Where does Riverbed go beyond WAN optimization? You are a dominant player, but the danger is that you become a one-trick pony. How do you expand the scope of this business?
What we're really doing is Layer 7 application acceleration, and that has much deeper implications than simply making a particular land line faster and cheaper than it was. It's something that changes the nature of global IT infrastructure for every major company in the world. Everyone likes a fast line. It was attractive to people because it saves them bandwidth. It's much cheaper to do optimization and compression across the network than to buy bigger links. But then we saw people doing data center consolidation with it, which is moving all the server and IT infrastructure out of branch offices, out of multiple data centers into just one or two. That trend has driven a lot of our growth in the last three years. Our products make that possible because you can't do data center consolidation unless you can give reasonable performance to the people who no longer have local servers.
We woke up one morning about six months ago to discover -- wait a minute -- what we're doing is creating private clouds, because what data center consolidation does is the creation of a private cloud. So, in fact, we've actually penetrated the cloud market.
The further implication is that if you have to have our technology to do private clouds, well, guess what, you can't do public clouds without it either. The biggest companies in the world -- the biggest service providers, the biggest systems integrators, the biggest Fortune 100 companies -- are coming to Riverbed to ask us 'how do we do our cloud infrastructure into the future?'.
Cisco started out in the multiprotocol router business and expanded into many other areas, including switching, storage, security and more. Should we expect to see a similar, diverse growth track and expansion plan for Riverbed?
Cisco is the Layer 2 and 3 of networking, but the action now is less at Layer 2 and 3 and much more Layers 4 through 7. Cisco's the king of 2 and 3 and we're the king of 4 through 7.
We just have a huge future for ourselves. We bring the capability customers could only dream about, that no one thought was ever possible, and here we are delivering it. There is a big product future, revenue future, for us. We're a strategic partner. I talk to CIOs all the time now, and the importance of having knowledge workers connect to their applications effectively, cheaply, globally, seamlessly, 24-7, is critical for them. That's what we do. That gives us an incredible position going into the next decade.
Where could the company go in that Layer 4 through 7 realm?
Our big concentration now is the edge of computing, the branch offices where a lot of the workers are. But there's an interesting thing happening with data center consolidation and cloud computing. The old paradigm was the corporate headquarters was where the corporate data center was, and all the branch offices were the edge. What's happening now is the corporate data center is being moved to a cloud somewhere else. It's in Wyoming or Arizona. What that means is that the corporate headquarters is now part of the edge. Having the headquarters join the edge increases our market opportunity.
We introduced a product about a year ago called Riverbed Services Platform (a virtual server environment on Riverbed's Steelhead appliances that allows you to plug in five other software modules of services you would place in your branch office. We're approaching the ability to give people that dream of the one-box in the branch office. You don't need a separate box to run your Windows server anymore, or really any other server in your branch office. That becomes the beachhead of a very big market. Into that single box you can plug in your security, your media server, your media streaming, your DNS, DHCP, domain controller, your print server, your Microsoft Windows server, anything you want. That becomes a large ancillary and synergistic market. That's the edge.
Then we have a market in the data center, the connection back to the edge. You have to have a Steelhead at either end of the link. So we have great big honkin' Steelheads -- one of which we just introduced, the 7050 -- that allow for massive scale in the data center for people to connect to the branch offices. Then further, the connection to the backup and recovery data center for storage to be sent over the WAN instead of by tape. Put it all together. We have the edge market, we have the data center market, we have the connection between them, and then we have the backup and recovery market. All available to Riverbed, just from that little start-up making stuff go faster across the wide-area network. The implications of speed and performance turned out to be much vaster than anyone dreamed back when we appeared on the scene in 2002.