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Security vendor Palo Alto Networks announced plans to acquire CloudGenix for $420 million. Palo Alto said it would integrate the CloudGenix software-defined WAN into its Prisma cloud security suite after the deal closes.
Palo Alto announced the agreement this week. The company plans to complete the transaction for the privately held CloudGenix by July. CloudGenix has more than 800 SD-WAN customers, according to Gartner.
CloudGenix, based in San Jose, Calif., offers an SD-WAN in software or hardware that a company deploys in its branch offices. The product includes basic firewall features and "strong" analytics, Gartner said in its November Magic Quadrant report. Management is cloud based.
Palo Alto plans to integrate the CloudGenix SD-WAN into Prisma Access, one of four core platforms within Prisma. Companies use Access to secure the branch connection to applications running on AWS, Google Cloud or Microsoft Azure. The software runs on any one of the three cloud platforms.
In the future, Palo Alto could combine CloudGenix software with Palo Alto products in a single hardware appliance for branch offices.
"I would also expect the management solutions to combine as well," said Bob Laliberte, an analyst at Enterprise Strategy Group.
CloudGenix could replace Palo Alto SD-WAN
The acquisition announcement comes four months after Palo Alto introduced its SD-WAN, which hadn't gained much traction in the market.
"The SD-WAN feature set was not strong," said Steve Garson, the CEO of consultancy SD-WAN Experts.
Palo Alto, on the other hand, elevates the baseline security features in CloudGenix through the Prisma suite. Besides the Access features, Prisma also provides compliance monitoring, risk discovery and data loss prevention for cloud applications.
Combining Palo Alto and CloudGenix products will deliver an SD-WAN with enterprise-class security from a single vendor. Today, Palo Alto supports the CloudGenix SD-WAN, but the vendors sell and support the products separately.
"Enterprises like having a single provider if it's possible," Garson said. "[Also], you can't look at SD-WAN without looking at security as part of the puzzle."
The fate of CloudGenix's Zscaler partnership
Currently, CloudGenix also partners with Zscaler to provide customers with security when connecting to cloud applications. The joint CloudGenix-Zscaler customers are likely to become a prime target for Palo Alto.
"I have to guess there's going to be some incentive to migrate to Palo Alto Prisma," Garson said.
CloudGenix customers will also benefit from Palo Alto's long list of systems integrators, which include some international companies, Garson said.
The acquisition is the latest example of a technology trend in which vendors are offering cloud applications like Prisma to secure data scattered across multiple cloud service providers. Gartner called the direction Secure Access Service Edge (SASE) in a report published last summer.
The deal also reflects continued consolidation within the SD-WAN market. This trend has been going on for several years. IDC has reported that the market isn't large enough to support its more than three dozen vendors.
Meanwhile, IDC predicts the SD-WAN infrastructure market will grow an average of nearly 31% through 2023 when it reaches $5.25 billion.