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McData OEMs Riverbed, propels it toward IPO

McData announced it is rebranding Riverbed's WDS product, catapulting the startup toward an IPO this summer, analysts say.

McData Corp. announced Monday a worldwide OEM agreement with wide-area data services (WDS) startup Riverbed Technology Inc. as part of its new Remote Office Consolidation (ROC) initiative.

McData is rebranding Riverbed's Steelhead appliance as the SpectraNet WDS Accelerator and will begin shipping the product by the end of this month.

"Riverbed is the anchor of the ROC initiative … which aims to consolidate remote sites into the data center," said Raj Das, vice president of the advanced products group at McData. "We are moving data from the edge to the core." He said the company spent a year evaluating technology before selecting Riverbed's appliance. The return on investment in this technology is about a year, McData claims.

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Tech Roundup: WAFS products

Riverbed competes with Cisco Systems Inc., Juniper Networks Inc. and Tacit Networks Inc., among others, in the increasingly competitive WAFS and WAN optimization market, collectively called WDS. This technology allows users to consolidate storage and servers in branch offices by replacing them with network devices that tweak file and network protocols, providing LAN-like access to data over the WAN.

Organizations deploying these products often face regulatory compliance and need to be more thorough about how they back up data at remote sites. Recovering it quickly and in a standard way is the ultimate goal. Others are checking out WDS to consolidate IT and save costs. Organizations such as T. Rowe Price and Electronic Arts are well underway with global deployments.

More on ROC

McData's initiative includes two other new products: SpectraNet Replicator for Exchange and McData bandwidth services. The former is offered through an OEM agreement with FalconStor Software Inc. and improves local file, database or Outlook mailbox recovery, or remote disaster recovery for Microsoft Exchange environments. McData's bandwidth services provide telecommunications bandwidth and WAN monitoring and management, which the company picked up through its acquisition of CNT.

"McData's challenge, once into the branch, is dealing with more than the storage folks," said Joe Skorupa, research director at Gartner Inc. "These kinds of deployments are often driven by the network or application people, not the storage people that McData knows." However, he says these groups are being forced to work together on compliance projects.

Riverbed's strategy

Analysts say that with over 600 customers and a second major OEM deal under its belt, it's no surprise Riverbed is preparing an S1 filing to go public this summer, if it isn't acquired first. Riverbed signed its first OEM deal with Hewlett-Packard Co. in May 2005.

"[By] preparing for an initial public offering (IPO), Riverbed is forcing the hand for someone to buy them," according to Skorupa. Riverbed reported revenue of $25 million last year and is projecting $60 million to $75 million this year, Skorupa said. He said he believes Cisco is significantly behind in this market and has the cash to take out Riverbed if it chooses. "[Cisco] has a bunch of piece parts that it still has to knit together." Buying Riverbed would "kill McData's" initiative, he said, and bring Cisco some big accounts.

For more conservative users, analysts say this market is changing fast and still has a ways to go before it's clear who the leaders will be.

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