Jon’s Network

In June 2006, Blue Coat Systems bought NetCache from NetApp. The purchase removed their largest competitor from the field and took a key partner away from another of their competitors. It also gave them 1000 new customers and all the support revenue they generate. Brilliant right? Yes, brilliant, but it can be a pain.

Earlier this year, I brought Blue Coat into an account that happened to be running NetCache. (So ya, I brought them into one of their customers). “We bought NetCache to kill it” was what the rep told them along with the fact that they will only get support for another year (until Sep. 2008 in their case). Blue Coat’s offer was to buy some of their SG boxes at a deep discount (around 40-50% off list most likely). If you are familiar with Blue Coat’s model, you will know that they charge a butt load of money for the hardware and practically give away the software. A 50% discount is still a handsome sum of money if it comes by surprise. The other option is to renew the NetCache support at about double what they were paying under NetApp.

NetCache users are thus conquered by Blue Coat. Yes, they are with a vendor that has a superior product, but they don’t have it yet. They still have to pay. Lots of them were planning on running their NetCache servers into the ground for the next decade with support. Is there anything wrong with this? No, but it still sucks.

This acquisiton was different than others Blue Coat has made because it enhanced their market position without changing their product offering at all. It was an imperial move to increase their hegemony. Their other acquisitions enhanced their solution set. Ositis became Blue Coat AV, Cerberian became Blue Coat WebFilter, and Permeo is now Blue Coat RA. Although all three of these are security related, a visit to Blue Coat’s home page hardly indicates that they are a security company any more. They are almost solely focused on WAN acceleration. Their stock has been soaring all year, so that is evidently a good move.

I was involved in the Ositis transition since I was an Ositis reseller when Blue Coat bought them. I had sold a couple of Ositis boxes to a large enterprise just before Blue Coat bought them and promptly end-of-lifed their solution. Neither I nor the customer noticed until the second renewal, when we were told it wouldn’t be happening unless they bought more gear from Blue Coat. (Similar to the NetCache situation now, customers are permitted to renew once for a year). The customer got angry and told Blue Coat to take a hike. After about three months of work, and after Blue Coat signed a nice legal document promising never to do something similar to them again, they figured Blue Coat was in their best interest at 40% off list and bought a ton of hardware and licensing and 3 years of maintenance. So that had a happy ending, but it was expensive and unplanned.

I’m in the middle of the NetCache thing now so I thought I would share. Companies try hard to make things static and predictable. It isn’t possible.