In the beginning, there was but one load balancing/application delivery market, and it was good. A couple of years and one dot-com meltdown later and somehow, unknown to many, we have two very distinct load balancer markets.
The first market, the enterprise or “premium†market, is the one that most are familiar with. Dominated by the well known brands of F5, Citrix, and a few others, they provide buckets of features on top of basic load balancing, such as TCP multiplexing, security, caching, compression, and more. The hardware is high-end and can push Gigabits of traffic. The pricing on these products reflect their advanced features, and deals are typically in the six-figures on the low end. The market is fairly well established, well understood, and well covered.
Then there’s the lesser known SMB “budget†load balancer market. This is a dynamic, fuzzy-edged, under-the-radar market dominated by companies like Barracuda, KEMP Technologies, and Coyote Point (the latter being the only company from the original dot-com boom). The features these companies offer in their products are more basic, and the traffic levels are more modest. The price, however, is much more affordable. Most companies in this space have offerings below $5,000.
While some lump the two markets as a single market, they are very distinct, with very different sales cycles and customer profiles, and for the most part they are mutually exclusive. About the only thing these markets do have in common is that the vendors that operate in each market are extremely competitive with each other.
Origins
This SMB budget market has its origins in the primordial ooze of the dot com bust. With thousands of companies going bust, load balancing equipment flooded eBay. You could pick up a load balancer for pennies on the dollar and put together a web infrastructure on a shoe string. Alteon load balancers were a favorite in this regard, and are still the among the most discussed product on my load balancing mailing list.
This voracious consumption of eBay load balancers clearly showed that there was a market for budget load balancers that provided basic functionality. They don’t provide all of the advanced features as the premium vendors, but the SMB market is more than willing to accept that with the price point.
Characteristics
Price is the most prominent distinction between the premium and budget markets. Most customer engagements for the premium vendors typically hit at least the high five-figures, if not the low six-figures. Sales cycles are measured in months, and usually involve an initial evaluation period. Customers for this market are typically very sophisticated and seasoned networking implementors.
In the budget market, a customer engagement may not even break $10,000. Sales cycles are measured in hours, and there’s not usually an eval period, usually just a liberal return policy. These customers are usually more server oriented, and load balancing can be an uncomfortable foray into the networking world. They’re implementation style is more “seat of the pants†style, representing a more wild west approach to deployment.
Implications
It’s difficult to say what effect these two markets will have on each other. I suspect that the two markets will remain separate, with very little in the way of customer poaching. Enterprise sites with deep pockets will probably continue to depend on the features provided by the premium boxes, and the SMB market will continue to enjoy the core features (load balancing, cookie persistence, health checking) that the budget boxes provide at the reduced price. It’s unlikely a bank would buy a budget box, and it’s unlikely a startup would drop $100,000 on a balancer when a $5,000 would do the same job.
I don’t see F5, Citrix, or any of the other big boys dropping into the budget market. They’re setup all wrong for that customer base, and the money to be made is too minimal when compared to seven figure deals.
Also, the barrier of entry for the budget market is very minimal, with open source projects and operating systems providing most of the capability out of the box. The features that differentiate the premium market, however, do represent a very substantial barrier of entry, requiring highly sophisticated engineering, support, and sales apparatus. Because of this, I don’t see the budget boxes making a run for the premium market, either.
Still, I do see the premium market companies and employees taking swipes at the budget boxes, which is odd, since a budget box customer would almost never consider a premium box. In a buyer’s guide to budget boxes I wrote a few weeks ago for Network World, an F5 employee posted a comment that was critical of the budget boxes, saying “Make sure your vendor walks upright into the room to discuss the requirements of today’s generation of Application Deliveryâ€, referring to the lack of features (and being further down the evolutionary track) when compared to the premium markets. It’s that and other comments that compelled me to write this article, to clarify the two markets.
I’m glad both of these markets are there. One provides the technological advancement and sophistication to bring application delivery to the next level, and the other makes load balancing affordable for the smaller players, bringing application delivery to the masses. But it is becoming more apparent to me that these two markets, while similar in many ways, need to be treated differently.
