Driven by strong growth in both physical high-end modular and virtual appliances, Application Delivery Controller (ADC) revenues rose 5 percent sequentially to almost $390 million in the first quarter of 2012, a report by The Dell'Oro Group indicates.
Led by the likes of A10, Cisco (Nasdaq: CSCO), Citrix (Nasdaq: CTSX), F5, Coyote Point, and Riverbed, physical high-end modular appliance revenue grew 14 percent over Q4 2011, while virtual appliances grew 167 percent.
What's driving growth of ADCs are a number of key factors: service providers building out more data centers, consolidation, and the emerging Bring Your Own Device (BYOD) trend where business workers are using their own devices (i.e., smartphones and tablets) to access company data and communicate with co-workers and management.
"The value of physical ADCs is apparent, as these specialized appliances are optimized to handle heavy workloads," said Casey Quillin, Senior Analyst of Data Center Appliance Market Research at Dell'Oro Group. "However, this quarter showed us that many customers find virtual appliances have a compelling value proposition in both production and development environments."
Although virtual appliances made up less than 5 percent of the overall market, the research firm forecasts that they will be a source of major revenue growth in the ADC segment.
In 2011, ADC vendors reported that revenue rose 10 percent to almost $1.4 billion, a trend that Dell'Oro previously reported would continue throughout 2012.
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