Blue Coat may face integration struggle

Industry watchers have warned that last week’s acquisition of WAN application delivery specialist Packeteer by Blue Coat may be tough to integrate.

Elie Barr, CEO of rival Expand Networks, said that given Packeteer’s own acquisitions in the WAN optimisation space, some of its products may be deemed surplus to requirements.

“It will be interesting to see what the future holds for [Packeteer’s] devices, and ultimately how they are integrated into Blue Coat’s device,” said Barr. “It may mean there is some reduction in functionality.”

Others saw the acquisition as an attempt to bail out a struggling company.

“It’s no secret that Packeteer revenues were flat to reducing. In a growing market it hasn’t been able to capitalise on its technology,” said one source.

Another reseller put forward the view that Cupertino-based Packeteer had stumbled after acquiring itself to get into the WAN optimisation space.

Blue Coat also laid down the gauntlet to its competitors after forking out $268m for its latest acquisition.

“We’re in a real fight with Juniper, Riverbed and Cisco and we really think this helps us meet that target,” said Craig Stewart, Blue Coat EMEA VP.

Recognising Blue Coat was often seen as an ‘also ran’, one of its distributors who declined to be named said targeting Cisco was over-ambitious.

“I doubt they’d ever be in a position to do that, but it does give them a reasonable profile,” he said.

Blue Coat EMEA marketing VP Nigel Hawthorne admitted there was no doubt Packeteer faced some challenges, but believed Blue Coat’s backing would renew confidence among Packeteer’s partners.

The acquisition is set to close sometime during the second quarter, subject to antitrust approval and a shareholder vote.