F5 Networks Inc.
) recently announced the acquisition of a privately-held
networking services provider, LineRate Systems, for an
undisclosed amount. The acquisition will further strengthen F5's
exposure to the networking market. The networking giant does not
expect the acquisition to have a material impact on its operating
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Colorado-based LineRate Systems specializes in providing software
solutions that help scale network services for better web-traffic
management. The company is a key player in the Software-defined
Networking (SDN) market and is expected to pave the way for F5's
penetration within the segment.
Software-defined networking is an approach to networking in which
control moves from hardware to a software application called a
controller. A network administrator uses these controllers to
direct and regulate network traffic from a centralized hub. This
minimizes the use of different and expensive switches for
controlling web-trafficking and helps in uninterrupted traffic
flow. Another important factor for choosing SDN technology is
that it is applicable for both private and public cloud
The SDN approach to networking is gaining popularity among key
networking players such as
Cisco Systems Inc.
Juniper Networks Inc.
) and many more.
F5 already leads the Application Delivery Controller (ADC) space.
LineRate greatly increases F5's chances of overshadowing its
peers in the SDN space.
Apart from SDN, F5 is also looking into other areas of
networking. In Feb 2012, F5 Networks acquired Traffix Systems, a
provider of diameter signaling products. With Traffix Systems,
the company is delivering a flexible architecture to enable its
customers to create a smart, converged carrier IP infrastructure.
This has allowed it to grow share in the Diameter signaling
We believe that F5 is well positioned to maintain its leadership
in the ADC market (especially due to Cisco's exit from the
market). But we prefer to remain on the sidelines as there are
some strong contenders in the SDN space.
Currently, F5 Networks has a Zacks Rank #3 (Hold).