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Riverbed buys assets of ailing WAN optimization vendor Expand Networks

In deal to buy assets from ailing WAN optimization vendor Expand Networks, Riverbed targets customer base, some technology.

Riverbed Technology has purchased assets of Expand Networks, but will not be coming to the rescue of the WAN optimization provider who fell into receivership in October of last year.

According to a press release issued by Riverbed on Jan. 11, the company will acquire certain assets, including intellectual property, out of liquidation from Israel-based Expand, which specialized in software-based, virtual WAN optimization. Riverbed has made it explicitly clear however, that it has not purchased the corporate entity of Expand Networks and will not be assuming any of the company’s liabilities, obligations or contracts.

Riverbed has not released any information regarding the specific assets it paid for, but the agreement does not appear to be technology-driven. Instead, Riverbed is trying to buy better access to Expand’s remaining customers as other WAN optimization providers move in with their own offers for product transitions.

Expand has a significant deal in South Africa, which may have been the primary source of income for the company, said Joe Skorupa, research vice president for Gartner Inc. “If Riverbed could assume that deal and put Riverbed products through it -- along with ongoing support for the existing expand products -- that deal alone could be several times over what Riverbed was rumored to have paid for Expand.”

“[Expand] has a large install base, so if [Riverbed] can go to that install base, sell them support contracts and sell them a good trade-in to its products, then some money can be made there,” he said.

With this deal, Riverbed will get ahead of the competition that is going after Expand’s accounts, noted Skorupa. “I would see this as very opportunistic,” he said. “If Riverbed can get access to the customers, pick up some support revenue and some conversion on sales quicker than they would otherwise and make back three or four times what they paid for it, it’s not a bad deal.”

Some elements of Expand’s WAN optimization tech may find its way into Riverbed

Riverbed will also use technology assets it acquired from Expand to “plug a couple minor holes in their product portfolio,” said Paula Musich, lead analyst for Washington, D.C.-based Current Analysis.

Skorupa said that Riverbed will simply parse through Expand’s algorithms, rather than move code in. “If [Riverbed] finds some algorithms that are perhaps a little better at what they do that what the company already has, they may take advantage [and] maybe tweak their own algorithms,” he said. “But I would not expect to see any significant integration of Expand technology into Riverbed.”

Expand WAN optimization customers helpless bystanders

No one stepped up to acquire Expand when the company went into receivership, and Musich believes that it is very unlikely any company would now that Riverbed has acquired certain intellectual property and assets.

"[Expand] just didn’t execute well and now their investors are paying the price [while] their customers are left holding the bag."

Paula Musich, Current Analysis Lead Analyst

“The last thing someone like Riverbed would want to do is to buy Expand Networks,” said Skorupa, noting that the company was not interested in inheriting the alleged legal trouble currently surrounding Expand. However, Riverbed has outlined plans for its recent acquisitions on its website.

In its statement, Riverbed hinted at making new technical support offerings available for previously- purchased Expand products, and hoped to work with former Expand customers “to explore promotional upgrade opportunities.”

According to Riverbed, the company will be offering a limited support program for Expand orders and products until April 30. After which, Riverbed intends on supporting the aforementioned contracts through January 31, 2013. During this time, the company has stated it plans to offer Expand customers special incentives during this time period to migrate to Riverbed solutions.

Skorupa noted that the short-term support program will most likely be driven by a small amount of Expand Networks employees and engineers that Riverbed will hire during this transitional time.

Musich noted that despite the efforts of its employees, Expand Networks is a victim of poor management and consolidation in the WAN optimization space. “The company just didn’t execute well and now their investors are paying the price, not to mention their customers are left holding the bag.”

Let us know what you think about the story; email: Gina Narcisi, News Writer

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