Hewlett Packard Enterprise (HPE) has juiced its SD-WAN platform by buying Silver Peak for $925 million. Silver Peak will be blended into HPE's Aruba business unit, which makes wireless local area network (WLAN) gear.
Santa Clara, Calif.-based Silver Peak will boost Aruba’s Edge Service Platform by merging its SD-WAN with Aruba’s SD-Branch solutions in order to help customers simplify branch office and WAN deployments. The combined solution could be used by remote workers while also facilitating cloud-connected distributed enterprises. Subject to the usual regulatory hurdles and closing conditions, the deal is slated to close in the fourth quarter of HPE's 2020 fiscal year.
“HPE was an early mover in identifying the opportunity at the edge and that trend is accelerating in a post-COVID world,” said Antonio Neri, president and CEO of HPE, in a statement. “With this acquisition we are accelerating our edge-to-cloud strategy to provide a true distributed cloud model and cloud experience for all apps and data wherever they live. Silver Peak’s innovative team and technology bring critical capabilities that will help our customers modernize and transform their networks to securely connect any edge to any cloud.”
While Neri touted the edge to cloud angle, a large number of SD-WAN vendors, including Cisco, VMware, Cato Networks and Juniper Networks, have focused on the secure access service edge (SASE) model for their product portfolios. Last year Gartner analysts coined the SASE term and positioned it as the unification of enterprise access security initiatives and WAN networking platforms, including SD-WAN.
"Silver Peak has consistently ranked No. 2 on our market share rankings, based on revenues," said Frost & Sullivan's Roopa Honnachari, industry director, information and communications technologies, in an email to FierceTelecom. "I am particularly impressed with how Silver Peak managed to stay independent and grow organically so far. It also did not try to follow others who place way too much importance on the SASE approach, and instead offered best-of-breed security options for businesses to choose from.
"I think this merger really highlights the trends we are seeing in terms of convergence among LAN, WAN, data centers, cloud, and of course the new edge which is increasingly remote work site."
With COVID-19 as the backdrop, service providers such as Colt Technology Services and Comcast Business are looking at offering SD-WAN services for remote workers. The pandemic has also accelerated organizations' move to the cloud as part of their digital transformations.
In November, Silver Peak announced it had it has expanded its product integration across Microsoft's cloud services.
"The COVID-19 pandemic highlighted the value of cloud and connectivity to ensure business continuity," Honnachari said. "Frost & Sullivan expects cloud adoption to further increase (54% of businesses use some form of cloud today) in the next five years, thus driving demand for SD-WAN solutions. The acquisition will enable Silver Peak to tap into the entire portfolio of cloud networking.
Silver Peak has long been rumored to be an acquisition target. Silver Peak has partnerships in place with Palo Alto Networks and Zscaler. In April, Palo Alto Networks announced was paying $420 million for startup CloudGenix. Silver Peak has a much deeper customer roster than CloundGenix.
"This continues the consolidation of the SD-WAN space," said Lee Doyle, principal analyst at Doyle Research. "I think it's a good acquisition by HPE to get the Silver Peak customer base and the leading edge SD-WAN technology."
Two years ago, Silver Peak announced a $90 million investment round. At that point, Silver Peak had raised a total of $80 million
According to recent research by Futuriom, the SD-WAN tools and software market will accelerate to a growth rate of 34% CAGR to reach $2 billion this year. In fourth year of the annual Futuriom Software-defined Wide-area networking (SD-WAN) Infrastructure Growth report, the SD-WAN sector is expected to reach close to $3 billion in 2021 and $4.6 billion by 2023.