NetScout Systems Inc. announced this morning that it will acquire Network General Corp. in a deal worth roughly $205 million.
NetScout, which makes network performance management tools, said users of both vendors' products will benefit from the deal, with NetScout users getting expert packet analysis and data mining and Network General users getting real-time monitoring and troubleshooting.
"This combination should prove to be very good news for organizations that are struggling to assure IT services in the face of the constant onslaught of new applications and technologies," said Enterprise Management Associates vice president Dennis Drogseth.
According to NetScout, the buy-out will translate into meaningful reductions in users' MTTR (mean time to restore) metrics, while reducing the training and skills required to manage complex network-based operations.
"Today, we are bringing together two established companies with complementary technologies to form a new, stronger organization that will have the scale, technology and mindshare to meet some of the greatest challenges associated with virtualization, convergence, SOA and highly distributed network-centric operations," NetScout president and CEO Anil Singhal said.
In addition, NetScout said it believes the acquisition will fuel the vendor's entry into the wireless service provider segment, an area dominated by large competitors. Adding Network General's capabilities, NetScout will be able to fill more performance monitoring and troubleshooting requirements.
Ken Hao, speaking on behalf of private equity firms Silver Lake and Texas Pacific Group -- which specialize in technology investments and bought Network General in 2003 -- said the NetScout-Network General combination will take the lead in performance monitoring and network management.
"We have long believed in the potential of packet-flow technology," Hao said. "This combination will accelerate our ambition to propel these solutions into their destined role as critical components of tomorrow's service-centric operating environments."
Network General CEO Bill Gibson said the acquisition will help in both the enterprise IT and service provider markets, with two former competitors joining forces.
"There has been a great degree of common vision between the two companies, which will promote accelerated product integration and continuation of our focus on technology leadership and support for our customers," Gibson said.
Drogseth added that the acquisition will lay a foundation for ensuring application service reliability across distributed network environments, an area that he said will demand attention as application designs become more modular and network-dependent.
"Most recent consolidations in the network management sector and the strategies employed by the major networking and software technology providers have largely been designed to broaden product portfolios and span a wider range of customer needs," Drogseth said. "This trend highlights the importance of network management and sets the stage for the next step: combining the resources and market access of the best-of-breed solutions in the packet/flow segment to deliver compelling solutions to the set of operational challenges that have thus far eluded the big five."
But not everyone is singing the acquisition's praises. Douglas Smith, president and co-founder of Network Instruments, a network analysis vendor and NetScout-Network General competitor, said the NetScout-Network General pairing falls short on various levels.
"Two wrongs don't make a right," Smith said.
Network General, while once the protocol analysis leader, has been suffering, he said. It was bought by McAfee in 1997 for $1.1 billion but sold off to Silver Lake Partners and Texas Pacific Group just six years later for $213 million. Smith also pointed out frequent management changes and lack of long-term vision as hindrances that have led to Network General's slip. Also, he said, Network General has stopped improving its Sniffer product line and instead has focused on higher-end reporting and dashboard analytics.
And NetScout has focused on reporting and dashboard analytics, Smith said, resulting in a lack of deep-packet inspection capabilities. That, coupled with Network General's moving away from deep-packet inspection, will leave NetScout without that core component.
"Deep-packet analysis was Network General's core competency years ago," he said, "but they've moved away from that."
The acquisition will be either good or neutral for NetScout users, Smith continued, because they will get some level of inspection capabilities they didn't have before. Network General users, however, will need to upgrade to NetScout gear, which can create an expensive and difficult transition.
Zeus Kerravala, Yankee Group senior vice president, said, however, that there are positives for users of both vendors' technologies. "Here's where I think it helps customers of both companies: If you know NetScout, they have great visibility tools with nGenius, and the probes provide insight into the health of a network," Kerravala said. "You can use NetScout to understand when a problem might happen by looking at the current network conditions. Network General tends to do more post-problem troubleshooting. If the companies can integrate the two together, they could provide a solution that's focused on reducing the amount of time it takes to solve an outage, since you understand the pre and post conditions."
On the business side, Smith said, it's not a bad idea. But on the technology side, he added, it looks like a response to Network Instruments partnership with NetQoS to combine Network Instruments network analysis and capture technology with NetQoS's reporting capabilities.
For companies looking to deploy network analysis, monitoring and troubleshooting tools, Smith said that it's best to "wait until the dust settles" before making any decisions.
"Integration of products is never easy, and the performance of both companies has been spotty over the past few years," he said. "I'd recommend that customers not invest any more into either company until [the release of] a clear roadmap of how the integration is going to happen."