INSIDE THIS ISSUE

Network Functions Virtualization

February 24, 2014

INTRODUCTION
WHAT IS NFV
WHY IS NFV IMPORTANT
MARKET IMPACTS
NFV TRANSACTIONS
SUMMARY
6. NFV MARKET MAP
7. COMPANY IMPLICATIONS
8. HOT COMPANIES
9. APPENDIX A MULTIPLES
SNAPSHOT
10. APPENDIX B GLOSSARY OF
TERMS
1.
2.
3.
4.
5.

By: Ryan Koontz, Managing Director of Research

Introduction
One of our primary investment theses for the next few years revolves around the
movement of critical computing functionality from specialized hardware into software
that can run on low cost, industry standard compute servers. This shift began in the late
80s when Oracle delivered the first hardware independent database and is now just in
the earliest stages of extending to other core system functions. The primary benefit of
this move is the ability to scale capacity both up and down as needs require (by adding or
removing server capacity), offering maximization of resources and significant cost
savings. VMWare has built a significant business doing this for compute power and we
believe dozens of new vendors will emerge in the coming 24 months offering similar
capabilities around the network and storage. We believe that one of the early adopters
of this capability is quickly becoming the carriers who are adopting a functionality
known as Network Functions Virtualization or NFV.
Cloud computing, virtualization and new approaches to networking are revolutionizing
enterprise services delivery. Carriers are now eager to jump on the bandwagon to realize
the same cost and network flexibility benefits by virtualizing many of the common wide
area network functions. Although, it will take years to implement, we believe NFV will
have a profound impact on carrier spending and the vendor landscape.
What is NFV?
NFV offers a new way to architect and implement Layer 4 through Layer 7 network
functions in software, running on standard hardware. Due to todays multi-core
commodity servers, carriers can finally get application performance in software which
historically was only found in high cost proprietary hardware. These virtual network
functions can be deployed in geo distributed architectures that are resilient, flexible and
elastic.
Not all functions will be virtualized and we believe there remains a market for custom
hardware optimized for very high performance and high throughput functions such as
large aggregation switching, optical transport and switching, and in core routing.
However, we do believe that outside of these applications, the majority of Layer 4
through Layer 7 network functionality will migrate to NFV over the next few years.

Common Network Functions That Will Be Virtualized

NAT

IMS

EPC

DNS

PCRF /
Policy
CDN

BRAS

DPI

WanOp

Load
Balancing
Firewall

SBC

NFV and Software Defined Networking (SDN) are complementary and drive similar benefits, but address very different networking
applications. NFV is the virtualization of network functions, where software defined networking (SDN) is the separation of the control
plane and forwarding / data plane to centralize and automate the control of network behavior. Once network functions are virtualized,
they can be dynamically deployed across the carrier network, necessitating an SDN based centralized control mechanism which is an
operational must in programing and automating the network.
Carrier NFV
Virtualization

Service and Network Abstraction

NFV

Virtualize network
function in
software - Virtual
Network Function
(vNF)
Run on standard
hardware
Run on virtual
machine
High Performance

SDN

De-couple control
plane from
forwarding / data
plane
Centralize control
plane
Run on standard
hardware
Open APIs
Programmability

Orchestration

Unified multivendor ecosystem

Open standards
OpenSource
(OpenStack)
Policy-driven flows

Why NFV is Important

Carriers are facing a serious dilemma that is forecasted to grow increasingly worse over the next decade. The fundamental issue is that
growth in network traffic and the corresponding cost is outpacing growth in revenue, which is unstainable. Carriers see NFV as critical to
addressing long term network cost reductions and accelerating the speed of new revenue generating services delivery.

The Carrier Dilemma

As carrier revenue growth flattens, the cost to grow the network footprint and capacity is becoming unmanageable. Adding subscribers has
quickly become a game of share shift among companies which is driving marketing costs higher. Carriers need to look to network
operations in order to sustain profitability growth in the face of saturation. Carriers are particularly eager to drive capex down and take
advantage of the abundance of cheap higher performance computing to achieve that goal. By using standard servers, they not only reduce
the equipment cost, but importantly reduce size and power requirements.
Carriers see the need for increased network flexibility and application awareness as key to remaining competitive. Further, they must
drastically reduce the time to market for new revenue generating features by breaking the bond equipment suppliers have over them with
proprietary designs that are expensive and slow to innovate. Multi-year network upgrade cycles become much more agile and are based on
incremental revenue driven network and service enhancements.
Market Impacts
NVF is a key carrier priority and the tier 1 carriers are not only in support of, but also leading the effort to standardize and implement
solutions over the coming quarters. NFV is in several carrier trials and many vendors have committed to key NFV focused roadmaps. We
expect to see continued trials in 2014 moving towards production deployments over the next few years.
NFV not only represents a major change to how L4-L7 functions are implemented, but it will likely change the vendor landscape and
pricing. Over a five year horizon, we see carrier capex and opex declining as they try to control costs and while they increasingly shift
spending away from expensive networking hardware to software based solutions. We believe by 2018, software based networking solutions
will have taken a significant share of the traditional carrier networking hardware market, that was about $150B in 2013.

Global Carrier Capex

Networking HW

Networking Equipment
($150B Annually)

Software-based
Networking
(NFV)

2013

2018

Carriers long term goals are to drive down total capex spending and significantly reduce networking equipment capex.
Key to this will be the shift from proprietary hardware base implementation to software which will lower the barrier
to entry for new equipment suppliers to enter the market and drive down pricing.
The stranglehold a handful of equipment suppliers have had that could make the large capital and R&D investments
in building expensive custom hardware platforms and silicon is now being eliminated. Many of the legacy equipment
suppliers are being forced to change their ways and now plan to offer virtual software solutions as well. However,
these solutions may see significant performance limitations as in many cases they are based on legacy telco design
principles for high availability, chassis based implementations, and not designed to take advantage of distributed
multi-core processing.
NFV represents a new opportunity for many non-networking suppliers as a new revenue source. In our discussions,
we believe many of the large tier 1 carrier considering NFV designs are not only talking to legacy suppliers on how
best to transition their networks long term, but non-traditional networking suppliers such as IBM, Amdocs and
Oracle are gaining significant mindshare and credibility in these discussions.
We have already seen NFV related M&A on the rise and as new technology suppliers enter the market, we expect to
see a significant consolidation to occur. We expect to see non-traditional well capitalized Enterprise focused suppliers
continue to make acquisitions in the L4-L7 software networking space.

NFV Transactions (2011-2014)

Ann. Date

Target

Buyer

Deal Size ($M)

2/15/14

Shenik

Aeroflex

1/30/14

Trendium, Inc.

JDSU

1/22/14

AirWatch, LLC

VMWare

1/14/14

Corente

Oracle

12/16/13

WANDL, Inc.

Juniper

60

12/13/13

Algorithms.io

LumentData

Streaming data analysis platform

12/13/13

Skytide

Citrix

CDN performance optimization

12/13/13

Newfield Wireless

Tektronix

Network virtualization and predictive geo analytics

12/13/13

Cloudmeter

Splunk

21

Network data analytics and user management

12/13/13

NI

JDSU

200

Network Monitoring, visibility

12/13/13

Volubill

CSG

12/10/13

Cloudmeter, Inc.

Splunk

21

11/16/13

Bitzer Mobile, Inc.

Oracle

Mobile app and data security

11/13/13

Fiberlink

IBM

11/13/13

Celcite

Amdocs

11/13/13

Aircom

Teoco

Mobile device and app management

Self-Optimized Networking, backoffice OSS / IT mobile
functions
Mobile network planning and network optimization

11/13/13

HighCloud Security

HyTrust

Virtualization and cloud security management

11/6/13

Insieme Networks, Inc.

Cisco

863

10/13/13

Now Factory

IBM

Customer experience analytics and management

10/13/13

Cmphonix

Untangle Sys

Network resource monitoring and performance management

10/13/13

Virtela

NTT

525

WAN, SDN, network optimization services

10/13/13

Netoptics

Ixia

190

Network Monitoring, visibility

10/13/13

Aexio

Infovista

28.5
1,540

130

Target Description
SDN, NFV, Cloud test and measurement
Service intelligence and performance management
Mobile device management and security
SDN controller for LAN and WAN
Network planning, management, design, optimization

Network monitoring, traffic error detection and policy

App monitoring solution for public, private cloud

SDN infrastructure

Network traffic analytics and management

Ann. Date

Target

Buyer

Deal Size ($M)

Target Description

10/3/13

Xtify, Inc.

IBM

Apps monitoring and geolocation services

9/13/13

Bugsense

Splunk

Mobile app performance analytics

9/13/13

Atix

Amdocs

120

Self-Optimized Networking

7/23/13

Sourcefire, Inc.

Cisco

2,395

Network security and virtual firewall and IPS

6/20/13

Composite Software, Inc.

Cisco

180

6/4/13

SoftLayer Technologies, Inc.

IBM

1,977

3/13/13

Nimbula, Inc.

Oracle

Cloud OS, infrastructure software

3/13/13

Tekelec

Oracle

IMS diameter signaling

3/8/13

Arieso Ltd.

JDSU

85

2/13/13

Acme Packet

Oracle

1,700

2/13/13

Intucell

Cisco

475

2/13/13

LineRate

F5

125

2/11/13

Virsto Software Corporation

VMWare

185

Self-Optimized Networking
Virtual LB, acceleration, SSL offload and traffic
management.
Storage hypervisor, server virtualization

2/4/13

Webscreen Systems Limited

Juniper

10

Distributed DDoS security

1/29/13

Cognitive Security s.r.o.

Cisco

1/13/13

Neuralitic

1/13/13

Vineyard

12/18/12
12/18/12

Data virtualization solutions

Cloud services

Subscriber experience monitoring and geolocation services

SBC, IMS diameter signaling

Network monitoring and security

Guavus

Mobile data monetization and marketing analytics

Procera

28

CREDANT Technologies, Inc.

Dell Inc.

Mobile data protection management

BroadHop, Inc.

Cisco

Mobile network monitoring and policy control

12/13/12

DataRaker Inc.

Oracle

Utility network monitoring and analytics

12/12/12

Contrail

Juniper

176

SDN controller and virtual routing and security

12/12/12

Endance

Emulex

130

Network monitoring and management

12/5/12

Zenprise, Inc.

Citrix

327

Mobile device monitoring and management

11/29/12

Cariden Technologies, Inc.

Cisco

141

Network monitoring and automation

11/16/12

Gale Technologies, Inc.

Dell Inc.

11/15/12

Cloupia, Inc.

Cisco

125

Cloud service automation

11/12/12

Vyatta

Brocade

44

Virtual routing and security

11/12/12

Onpath

Netscout

32

Network Monitoring, visibility

10/12/12

Opnet

Riverbed

1,000

10/4/12

vCider, Inc.

Cisco

Virtual cloud networking

9/24/12

Butterfly Software Ltd.

IBM

App and data monitoring and optimization

8/7/12

Pattern Insight Inc.

VMWare

Machine to machine analytics

8/7/12

Apere, Inc.

Citrix

Network security

7/30/12

Xsigo Systems, Inc.

Oracle

Virtual infrastructure

7/13/12

Virtuata, Inc.

Cisco

Security software for virtual machines

7/12/12

Nicira

VMWare

7/12/12

Ascade AB

CSG

7/2/12

DynamicOps, Inc.

VMWare

7/2/12

BreakingPoint Systems

Ixia

160

Security performance testing

6/12/12

Byte Mobile

Citrix

435

Mobile analytics and optimization

5/7/12

Anue Systems, Inc.

Ixia

154

Network monitoring and management

1,260
19
-

Policy Enforcement for Enterprise DPI

Network and app monitoring and automation

Applications Monitoring, visibility

SDN Controller and virtual network overlay

Network monitoring and automation of voice services
Operations virtualization

Ann. Date

Target

Buyer

Deal Size ($M)

5/3/12

Truviso LLC

Cisco

Network monitoring and analytics

3/28/12

ClearAccess, Inc.

Cisco

Subscriber monitoring and CPE management

3/13/12

SonicWALL L.L.C.

Dell

Network security

AppAssure Software, Inc.

Dell

App monitoring and replication

Mykonos Software, Inc.

Juniper

83

App security

Traffix

F5

130

IMS diameter signaling

2/24/12
2/22/12
2/1/12
1/5/12

Target Description

Dyaptive Systems, Inc.

JDSU

15

Mobile network monitoring and performance testing

11/21/11

Simena, LLC

NetScout

21

Network monitoring and testing

10/20/11

BNI Video

Cisco

99

Video monitoring and video CDN

8/26/11

PacketMotion, Inc.

VMWare

Network monitoring and security

8/21/11

Axiom Systems Limited

Cisco

31

Network service delivery automation

8/15/11

Crescendo Networks Ltd.

F5

Application delivery, load balancing and optimization

7/19/11

Aptimize Limited

Riverbed

34

Applications and web service acceleration

7/12/11

Cloud.com, Inc.

Citrix

164

CloudStack orchestration software

6/29/11

Pillar Data Systems, Inc.

Oracle

368

App aware storage solutions

6/20/11

RNA Networks, Inc.

Dell

Infrastructure virtualization

6/17/11

Bridgewater Systems

Amdocs

216

5/16/11

Shavlik Technologies, LLC

VMWare

Cloud based network management and security

4/19/11

Telenor Connexion AB

Ericsson

Machine to machine connectivity

3/27/11

Psytechnics Limited

Netscout

17

Mobile policy control

VoIP, telepresence, performance management

NFV Acquisitions by Technology Category

Security
Network visiblity, analytics,
policy
L4-L7 Network Services
SDN / Network Infrastructure
IMS / Mobile Core
Backoffice / Orchestration
App visibility, analytics, policy

2011

2012

2013

Most Active Acquirers of NFV Technology (2011-2014)

NFV Market Map

Carrier Network Functions

Mobile Core/IMS

Networking

Network Service (L4-L7)

Service and Network Abstraction

Security

Orchestration

Backoffice/IT

SDN / Hypervisor

Company Implications
Over the next several years, we see NFV as being highly disruptive to many of the legacy service provider equipment
suppliers.

Cisco (CSCO) is most exposed. In the long term, we believe it will remain a key supplier of many of the virtual
network features, but is obviously exposed to pricing and margin pressures due to its significant enterprise proprietary
hardware business. We see the convergence of virtual networking features happening at the enterprise premises first
and CSCO will likely offer a suite of virtual features at a significantly lower price than the discrete boxes it sells to
enterprises today.

Juniper (JNPR) is modestly exposed as much of the equipment it sells to carriers is in the core routing, core security
and high-capacity edge routing which are likely to remain as custom hardware devices for years. We believe JNPR
lacks a story around NFV, but could leverage an aggressive roadmap (both organic and likely through M&A) to gain
share in pieces of the network it does not currently serve.

Ericsson (ERIC) and Alcatel Lucent (ALU) are both modestly exposed. Although both play in the IMS and should be
able to remain relevant, but their long term positions as dominant suppliers to the carrier market is becoming
precarious especially as very large enterprise players enter the market and challenge both ERIC and ALU on wireless
network product and professional services sales.

Oracle (ORCL), Amdocs (DOX), IBM (IBM) should benefit from this network transition. We believe these
suppliers see NFV as a good opportunity to enter the carrier networking environment as a key long term strategy to
help diversify their business and tap into the large pool of carrier network spending. We anticipate additional carrier
focused acquisitions by these players in the coming quarters.

VMWare (VMW) is a key supplier of virtualization and now overlay networking solutions for the data center, and we
believe VMW could leverage its NSX to potentially become a bigger player in the network virtualization and
centralized automation of the network.

F5 (FFIV) is a key supplier of data center and carrier load balancing products. The company hopes to expand its
carrier sales in IMS (through its acquisition of Traffix) and in network security. We believe it could establish itself as a
key player in carrier network virtualization through its own solutions and through additional M&A.

Citrix (CTXS) is a supplier of virtual application delivery and firewall functions with its industry leading Netscaler
SDX platform. CTXS has partnered with Palo Alto Networks (PANW) and CSCO to offer virtual firewall and IPS
and we believe CTXS plans to offer several other virtual network functions from the SDX platform. We see CTXS as
an acquirer in this market segment.

RedHat (RHT) is supplier of OpenStack products, a key open source orchestration platform for compute, storage and
networking in the data center and carrier network.

Below, we have highlighted several smaller public and privately-held companies we think are well positioned to see
high sales growth over the coming years and are likely acquisition targets.

Hot Companies
Company
6WIND

Description
Network performance software for OEMs delivering advanced networking functions in mobile infrastructure equipment,
networking appliances, and data center networking.

A10 Networks

Networking and security solutions that help organizations accelerate, optimize, and secure their applications.

Affirmed Networks

Network virtualization solutions for mobile broadband and M2M networks.

Allot (ALLT)

Internet protocol DPI and service optimization solutions.

Barefoot Networks

Merchant silicon solutions designed for low cost, high performance white box switching

BTI

Packet / Optical infrastructure and service solutions for service providers and cloud providers.

Calsoft Labs

System integrator and technology consulting and product engineering services globally with focus on Networking infrastructure,
Cloud infrastructure, and Mobility.

Connectem

M2M connectivity and virtual mobile EPC solutions.

Cumulus Networks

Network virtualization framework for cloud service providers, hybrid clouds, access providers, and private clouds and
enterprises.
Open Linux based networking operating system.

Cyan (CYNI)

Packet / Optical networking solutions for service providers.

Embrane

Multi-service software architecture that delivers network services to enterprises and service providers.

Gigamon (GIMO)

Network visibility and policy control

Guavus

SP network visibility and analytics

Illumio

Virtual application security.

Lemko

Software and hardware based mobile broadband operating systems for wireless communication networks.

Lyatiss

Application defined networking solutions that offer networking analytics and capabilities to cloud infrastructure users.

Mavenir (MVNR)

Software-based networking solutions for mobile networks to deliver IP-based voice, video, rich communications and enhanced
messaging services.

Metaswitch Networks

Voice, IMS and next gen networking functions for service providers.

Midokura

Network virtualization software solutions.

Netsocket

Automation applications running on a completely virtualized network infrastructure for distributed enterprise branch
offices/small to medium-sized businesses and the Service Providers

Overture Networks

Ethernet edge and aggregation solutions to service providers, network operators, and enterprise customers.

Pertino

Cloud-based, Network-as-a-Service platform that combines the power and pervasiveness of the cloud with overlay network
virtualization, software-defined networking (SDN), service-oriented network functions virtualization (NFV), and real-time
orchestration.

Pica8

Open networking platforms based on merchant silicon, that are easy to program, robust to operate, and low-cost to procure.

Plexxi

Content and resource aware, dynamic networking.

Pluribus

Hardware accelerated next-generation, virtualized switches and a distributed Netvisor offering a fully programmable network
fabric provide true network virtualization for cloud and enterprise data-centers.

Qosmos

Distributed network intelligence (NI)/deep packet inspection (DPI) technologies for network monitoring and policy control.

Razorsight

Software-as-a-service based profit analytics solutions for service providers.

Saisei Networks

IP flow-based Internet traffic management solutions for wireline and wireless/mobile broadband service providers and
enterprises. worldwide.

Silver Peak Systems

Virtual and physical wide area network (WAN) optimization solutions.

Sonus (SONS)

Voice and IMS network solutions for service providers and enterprises.

Tail-f

Overlay OS software to enable programmability and automation of network elements.

ConteXtream

10

Company
VArmour

Description
Network security for virtual network overlays.

Vello Systems

OpenFlow enabled software defined application platform allows the network to act as a dynamic pool of resources for everchanging application requirements to speed deployment and increase agility.

Vistapointe Networks

Mobile analytics tools to effectively monitor subscriber, device and network parameters to streamline operations and enhance
marketing initiatives.

Xpliant

Merchant silicon solutions designed for low cost, high performance white box switching

11

Appendix A - Multiples Snapshot

Market
Cap ($M)
-

EV
($M)
-

EV/Revenue
(2014E)
-

$49,736

$45,7
21
1,240
-

1.5x

0.6

525

13,59
8
410

6,772

5,560

1.5

852

785

4.0

4,098

3,710

1.7

2,270

3,160

1.5

116,556

1.8

9,995

84,59
3
9,260

Connectem designs and develops wireless device solutions.

ConteXtream provides cloud-based network virtualization framework for cloud service
providers.
Cumulus Networks engages in making networks invisible for Internet scale applications.

Cyan provides various carrier-grade networking solutions that transform legacy networks
into open high-performance networks.

166

94

0.9

Dell is an information technology company, and provides a range of technology

solutions.
Dialogic provides various communication products and technologies to wireless and
wireline service providers for the transport, transcode, manage, and optimize video, voice,
and data traffic.

16

97

Company
6WIND

Description
6WIND S.A. provides a commercial software solution that solves network performance
challenges for OEMs.

A10 Networks
(ATEN)

A10 Networks provides networking and security solutions that help organizations
accelerate, optimize, and secure their applications.

Accenture (ACN)

Accenture provides management consulting.

Aeroflex (ARX)
Affirmed
Networks
Alcatel Lucent
(ALU)
Allot (ALLT)

Aeroflex offers network test and measurement solutions.

Affirmed Networks operates as a stealthy telecom startup.

Amdocs (DOX)
Arista Networks
Barefoot
Networks
BigSwitch
BroadSoft
(BSFT)
Brocade
Communications
Systems (BRCD)
BTI

Calsoft Labs
Ciena (CIEN)
Cinarra Systems
Cisco Systems
(CSCO)
Citrix Systems
(CTXS)
Connectem Inc.
ConteXtream
Cumulus
Networks
Cyan (CYNI)
Dell
Dialogic (DLGC)

Alcatel Lucent provides Internet protocol (IP) and cloud networking.

Allot develops, markets, and sells intelligent Internet protocol service optimization
solutions.
Amdocs Limited provides software and services for communications, media, and
entertainment industry service providers.
Arista Networks provides cloud networking solutions for datacenter and computing
environments.
Barefoot Networks provides merchant silicon solutions designed for low cost, high
performance white box switching
SDN controller and OpenFlow switch fabric
BroadSoft provides software and services that enable mobile, fixed line, and cable service
providers to deliver hosted or cloud based unified communications.
Brocade Communications Systems provides Internet protocol based networking solutions
and storage area networking (SAN) solutions.
BTI Systems Inc. develops and delivers infrastructure and service enablement solutions
for service and content providers.
Calsoft Labs is a system integrator and offers technology consulting and product
engineering services globally with focus on Networking infrastructure, Cloud
infrastructure, and Mobility.
Ciena Corporation provides communications networking equipment, software, and
services that support the transport, switching, aggregation, and management of voice,
video, and data traffic worldwide.
Cinarra Systems develops analytics software architecture which processes large amounts
of operator data and build in real time data insights that are then be monetized using
mediation platform.
Cisco Systems designs, manufactures, and sells Internet protocol (IP) and related
products.
Citrix Systems provides cloud computing solutions.

689
11,327

2
-

3.7

2.9

12

Company
Embrane

Description
Embrane designs and develops a multi-service software architecture that delivers network
services to enterprises and service providers.

EMC (EMC)

EMC Corporation develops, delivers, and supports information infrastructure and virtual
infrastructure technologies, solutions, and services.

Emulex (ELX)

Emulex Corporation provides network connectivity, monitoring, and management

products for networks that support enterprise, cloud, government, and
telecommunications.
Ericsson provides telecommunications equipment and services to mobile and fixed
network operators.

Ericsson (ERIC)

Market
Cap ($M)
-

EV
($M)
-

EV/Revenue
(2014E)
-

47,793

45,77
3

1.9

591

536

1.1

38,922

31,84
2

0.9

665

466

0.7

Extreme
Networks
(EXTR)
F5 Networks
(FFIV)

Extreme Networks provides network infrastructure equipment and services for

enterprises, data centers, and service providers.
F5 Networks provides application delivery networking technology that secures and
optimizes the delivery of network-based applications, and the security, performance, and
availability of servers and other network resources.

8,096

7,518

4.3

Fujitsu Limited
(FJTSY)

Fujitsu is an information and communication technology (ICT) company, provides a

range of technology products, solutions.

11,641

16,26
4

0.4

Genband

Genband develops multimedia and cloud communications solutions for fixed and mobile
service providers, cable operators, wholesale market.

Gigamon
(GIMO)

Gigamon designs, develops, and sells products and services that provide customers
visibility and control of network traffic.

973

867

4.9

Guavus

Guavus designs and develops decision making solutions for the telecommunications
industry.
HP together with its subsidiaries, provides products, technologies, software, solutions,
and services to individual consumers and SMBs.

54,076

64,99
4

0.6

Hewlett-Packard
Company (HPQ)
Huawei

Huawei engages in the research, design, development, manufacture, marketing, and

export of toy series that integrate both educational and entertainment functions.

581

513

Illumio
Infinera (INFN)

Illumio offers virtual application security solutions.

Infinera provides optical networking equipment, software, and services to
communications service providers, Internet content providers, cable operators, and
subsea network operators.
IBM provides information technology (IT) products and services.

1,013

825

1.3

187,679

216,4
68

2.2

940

886

1.7

2,977

2,436

1.3

Juniper Networks designs, develops, and sells products and services that provide network
infrastructure for networking requirements of service providers.

13,514

11,66
7

2.3

Lemko is an IP software company that develops mobile broadband operating systems for
wireless communication networks.

335
1,563

363
1,239

3
2.5

International
Business
Machines (IBM)
Ixia (XXIA)
JDS Uniphase
(JDSU)
Juniper Networks
(JNPR)
Lemko
Lyatiss

Ixia provides converged Internet protocol (IP) network validation and network visibility
solutions.
JDSU provides communications test and measurement solutions.

Lyatiss develops application defined networking solutions that offer networking analytics
and capabilities to cloud infrastructure users.

Matrixx Software

Matrixx Software delivers real-time charging and balance management for any
combination of payment, access technology and service.

Mavenir
(MVNR)
Mellanox
Technologies
(MLNX)
Metaswitch
Networks

Mavenir develops software-based networking solutions for mobile networks to deliver IPbased voice, video, rich communications and enhanced messaging services.
Mellanox produces and supplies semiconductor interconnect products for computing,
storage, and communications applications in the high-performance computing, Web 2.0
Metaswitch Networks provides communication services and solutions to business and
residential customers.

13

Company
Midokura
NetApp (NTAP)

Description
Midokura develops network virtualization software solutions.
NetApp engages in design, manufacture, and marketing of networked storage solutions.

NetScout
Systems (NTCT)

NetScout Systems designs, develops, manufactures, markets, licenses, sells, and supports
unified service delivery management, service assurance, and application and network
performance management solutions.

Netsocket
Nokia (NOK)

Netsocket develops automation applications that run on a completely virtualized network

infrastructure for distributed enterprise branch offices/small to medium-sized businesses
and the Service Providers
Nokia operates as a mobile communications company.

Market
Cap ($M)
14,348
1,440

25,166

EV
($M)
10,07
1
1,295

EV/Revenue
(2014E)
1.5

21,92
3
149,3
97

1.3

3.0

Oracle (ORCL)

Oracle develops, manufactures, markets, hosts, and supports database and middleware
software, applications software, and hardware systems.

161,727

Overture
Networks

Overture Networks engages in the development, manufacture, and marketing of carrier

Ethernet edge and aggregation solutions to service providers, network operators, and
enterprise customers.
Pertino offers a cloud-based, Network-as-a-Service platform that combines the power
and pervasiveness of the cloud with overlay network virtualization, software-defined
networking (SDN), service-oriented network functions virtualization (NFV), and realtime orchestration.
Pica8 develops and manufactures network switches.
Plexxi offers solutions for content and resource aware, dynamic networking.
Pluribus develops hardware accelerated, next-generation, virtualized switches and a
distributed Netvisor offering a fully programmable network fabric provide true network
virtualization for cloud and enterprise data-centers.

231

123

1.5

41

40

3,206

3,272

2.8

Pertino
Pica8 Inc.
Plexxi
Pluribus

3.8

Procera
Networks (PKT)

Procera Networks provides intelligent policy enforcement solutions based on deep packet
inspection technology that enable mobile and broadband network operators and entities
to manage and control their private networks.

Qosmos SA

Qosmos provides network intelligence (NI)/deep packet inspection (DPI) technologies

that identify and analyze data traveling over networks in real time.

Radcom
(RDCM)
Razorsight

Radcom provides service assurance and customer experience monitoring solutions.

Riverbed
Technology
(RVBD)
Saisei Networks

Riverbed Technology provides solutions to the fundamental problems associated with

information technology (IT) performance across wide area networks (WANs).

Samsung
Electronics
(SSNLF)
Silver Peak
Systems
Sonus Networks
(SONS)

Samsung is engaged in consumer electronics, information technology and mobile

communications, and device solutions businesses.

150,891

110,8
92

0.5

Silver Peak Systems develops wide area network (WAN) optimization solutions.

834

636

2.1

653
8,588
-

406
8,236
-

0.9
22.1
-

Spirent (SPT)
Splunk (SPLK)
Tail-f Systems

VArmour

Razorsight Corporation offers SaaS based profit analytics solutions for communications
service providers.

Saisei Networks provides IP flow based Internet traffic management solutions for
wireline and wireless/mobile broadband service providers, cable operators, government
agencies, schools and universities, and enterprises.

Sonus Networks provides networked solutions for communications service providers and
enterprises.
Spirent develops network and device testing and tools for service management and field
test to improve troubleshooting and quality.
Splunk provides software solutions that provide real-time operational intelligence.
Tail-f Systems provides software solutions and tools that enable developers of network
management systems to build or extend their applications.
Network security for virtual network overlays.

14

Company
Vello Systems
Veryx
Vistapointe
Networks
VMWare (VMW)
Windriver
Xpliant

Description
Vello Systems offers an OpenFlow enabled software defined application platform allows
the network to act as a dynamic pool of resources for ever-changing application
requirements to speed deployment and increase agility.

Market
Cap ($M)

EV
($M)

EV/Revenue
(2014E)

Veryx develops testing solutions for SDN, Carrier Ethernet, Layer 2, IPv4, IPv6,
Network Management and Time Synchronization technologies.
Vistapointe Networks provides mobile analytics tools to effectively monitor subscriber,
device and network parameters to streamline operations and enhance marketing
initiatives.
VMware provides virtualization infrastructure solutions.

37,905

32,18
0

5.3

Windriver offers network intelligence, content inspection and content acceleration

solutions.
Merchant silicon solutions designed for low cost, high performance white box switching

15

Appendix B Glossary of Terms

NFV Network Functions Virtualization. A software based implementation of networking functions typically implemented
in proprietary hardware.
SDN Software Defined Networking. Decoupling of control plane from forwarding plane in network elements. All or part
of the control plane is centralized for better network programmability and automation.
NAT - Network Address Translation. A Technique to reuse IP addresses between private and public networks for preserving
scarce Internet IP addresses.
IMS IP Multimedia Service. An architectural framework for delivering IP multimedia services (voice, data, video) across
networks, especially in mobile networks.
DNS - Domain Name System. Translates human-friendly host names for computers, web sites, services, or any resource
connected to the Internet to numbered IP addresses.
Load Balancing - Distribution of L4 L7 workloads across compute, storage and networking resources to optimize resource
use, maximize throughput, minimize response time.
Firewall A network element that examines network traffic flows and acts as a barrier between a trusted, secure internal
network and other networks.
DPI Deep Packet Inspection. A network element that examines IP traffic flows and their contents to provide traffic
analysis, traffic blocking, or to apply policy to traffic flows.
PCRF - Policy and Charging Rules Function. A software based network element that determines policy rules and enforces
them in an IMS multimedia network.
BRAS - Broadband Remote Access Server. A network element that aggregates user sessions, applies policy rules and routes
traffic to and from broadband remote access devices such as digital subscriber line access multiplexers (DSLAM) on an
Internet service provider's (ISP) network.
EPC Evolved Packet Core. A set of network elements responsible for mobile subscriber authentication, routing of voice
traffic and data traffic in 4G LTE mobile networks. The EPC is composed of four network elements: the Serving Gateway
(Serving GW), the PDN Gateway (PDN GW), the MME and the HSS. The EPC is connected to the external networks, which
can include the IMS network.
SBC Session Border Controller. A network element that sits between different carrier networks or within a single carrier
network between the access and core networks that offer Voice over IP (VoIP) services. SBCs are used in the set-up, teardown and to apply policy to VoIP calls.
WanOp Wide Area Network (WAN) Optimization. A set of techniques applied to IP traffic to optimize throughput,
bandwidth, latency, and congestion.
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CDN Content Delivery Network. A set of highly distributed network elements that optimize and serve content to endusers with high availability and high performance. CDNs serve a wide variety of content including web pages, downloadable
objects (media files, software, documents), applications (e-commerce, portals), and live streaming video.

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