Monday morning, Hewlett Packard Enterprise announced a deal to acquire Silver Peak, a leader in the SD-WAN market, for $925M. Silver Peak is expected to combine with Hewlett Packard’s Aruba division to streamline their edge-to-cloud strategy. This acquisition gives HPE Aruba a more competitive edge against broader market competitors and saves them roughly two years of building out their own SD-WAN product.
As seen in the graph above, transactions of SD-WAN companies have been trending up in the past 10 years with the majority of them being small to midsize companies. Overall this transaction underscores the general shift in the WAN market to SD solutions that are interchangeable and easy to incorporate into existing networks. With the SD-WAN market expected to reach $4.1B by 2023, it makes sense that large companies like HPE, Cisco, & VMWare have chosen to acquire to accelerate time to market of their solutions.
Why this transaction?
The York IE team made this our Transaction of the Week (TOW) because this acquisition puts HPE Aruba in the SD-WAN fast lane and allows them to compete against major players like Cisco & VMWare. By building off the traditional Wide Area Network (WAN), SD-WAN users can connect to the cloud seamlessly & use bandwidth more efficiently. As a standalone solution, HPE Aruba worked well for SD-Branch solutions but with the addition of Silver Peak tools, HPE Aruba’s cloud anywhere strategy will begin to take market share away from other competitors. HPE CTO, Erik Krucker, sees the transaction as a jumpstart to the timeline saying, “It gives HPE a much stronger competitive position in the market a lot quicker than it would have been with Aruba building this out internally”. This trend of buying solutions rather than creating them internally has become increasingly popular in the SD-WAN market; In 2017 Cisco completed a $610M purchase of SD-WAN Viptela. More often than not companies are opting out of creating their own solutions and are rather buying small startups and their IP’s.Market proven
