Tektronix, Arbor CEOs Weigh In on Deal

In the wake of Tektronix Communications ' acquisition of Arbor Networks , Light Reading chief editor - events Carol Wilson spoke to Tektronix CEO Rich McBee about the opportunities his firm sees in wireless security. Arbor CEO Colin Doherty joins the telephone conversation late in the interview, adding his thoughts on the competitive landscape for security services. (See Tektronix Buys Into Security.)

LR: Rich, how long have your companies been in discussion on this? What was the genesis?

Rich McBee: We have been watching the IP-ionization of the core for a very long time. To enter into the security marketplace has been a long-term strategy of ours -- I would say almost for the last 36 months, from a communications business perspective. We have been studying the marketplace, and we entered into talking with all the major players in the space and keeping an eye over it for the last 12 to 18 months. We found Arbor was a perfect match for us. We weren't looking for any of the virus-protection kind of stuff, we wanted a heavy hitter that dealt with heavy infrastructure. And really, the availability space was a classic match for us -- [Arbor's] heavy software orientation, and [its] presence in large Tier 1 ISPs and Tier 1 carriers.

Also for us, Tektronix Communications has a great leadership position and footprint in mobile networks. And as [it has] more and more smart devices on [it], the whole mobile space has to deal with a new set of threats that [it] really [hasn't] had to deal with before. The mobile space, as [it is] transitioning [its] core to IP -- the reality is that market space is moving right towards Arbor in terms of having to have to secure D-DOS attacks that are starting to emanate from mobile devices, [whereas] that's something [it] didn't have to worry about three years ago.

We are going to run Arbor as an independent company, but [it has] a tremendous amount of IP experience that we can leverage across our other businesses, and [it is] also going to serve as a beachhead as we pick and choose where else we are going to play in the security marketplace.

LR: In what way is Arbor going to be able to take advantage of the wireless footprint that Tektronix already has?

McBee: One of the things that is a challenge for smaller-scale companies such as Arbor is that as you are trying to deal into these big Tier 1 companies -- you know, they are like, 'Look, we can't have a lot of small companies. If we are going to buy off on you as our major support element then we want to make sure the financial wherewithal is underneath there.' There are risks of capitalization and consolidation and all those kinds of things. This really takes that off the plate as an objection.

McBee: I think that the scale and support we have -- we have experience that can help the management team, and it's just a fantastic management team. We can help them as they start scaling up; we are a bigger and broader organization.

LR: Arbor does have a very strong position with Tier 1s on the security side. How does that help Tektronix?

McBee: They have a very good network with fixed-line carriers, and we have a very strong network with mobile carriers. I think there will be some leverage going each way.

LR: What sort of changes should people expect to see on either side, post-acquisition?

McBee: We just got off the phone with a couple of our selling organizations around the world, [which] are eager to talk to their sister organizations about lead sharing. We can leverage some of the infrastructure -- we potentially don't need two physical facilities in the same country. We could have the guys share a roof, but it doesn't mean we are going to merge channels.

Where we may have a footprint somewhere in the world where Arbor wants to go, we can just put account managers on the ground and move very quickly into some of these emerging markets. Again, we will operate independently; the sales channels will operate independently. We are looking to expand our network monitoring and quality of service on the comm side, and, over the next several months, we will be working on the strategies we want to expand on Arbor side. The key thing for us is that we are entering into the security space with the market leader and we intend to leverage and grow from that investment, specifically in security.

LR: Mobile companies are now moving to the evolved packet core. What are your major opportunities there, with Tektronix and now with Arbor? McBee: We're in the front end of a major technology turn, with the carriers going from 3G infrastructure to LTE. I think one of the opportunities from a Tektronix Comms perspective is that, prior to LTE being the new technology, you still had the two camps, all the CDMA technology and then the GSM world. LTE finally breaks that down and we have a common packet infrastructure. So from the Tektronix Comms side, we have a major opportunity. As we move to that, all those CDMA carriers that we predominantly didn't serve in the past now become open game for us.

On the Arbor side, the mobile guys are moving to IP networks; this is moving right into their wheelhouse of core competency where they've been very successful with fixed-line guys over the last few years. That transition to IP networks on both the mobile and fixed side are what we see as great opportunities for the future.

The mobile carriers are starting to see the complexity and problems from a security perspective. We have tremendous challenges on quality of service because of the amount of bandwidth, the complexity, all that kind of stuff, and now they have a whole new world of security threats thrown at them. Colin Doherty just joined me -- Colin, what would you add to that?

Colin Doherty: I think what we've seen in the fixed-line side are a lot of botnet attacks coming through home computers and DSL subscribers, and now the wireless guys are seeing that happen on smartphones and PDAs and the proliferation of applications coming in through those phones back onto the network. To Rich's point, as they are now on a common IP bearer, we see those security concerns beginning to crop up on mobile networks, which I think is a good synergistic area for both of us.

LR: Given the proliferation of smartphones, does this become a security market that eclipses what you have had on the fixed-line side?

Doherty: Yeah, I think the opportunity is certainly very large; I think we've got such as good position in the wireline Tier 1 global ISP space. A lot of these players have wireless properties themselves so it's a natural evolution for us to move into that whole space on the IP side.

LR: Colin, is the competition you face in that space going to be similar to what you face on the wireline side, or where else are you expecting competition to come from?

Doherty: That's a good question, I think that there are a lot of different people looking at the security space in general now because of the size of different threats. We are seeing 49 to 50 gigabit threats on the networks, which are going to take down any operator or any data center or any wireless player. I think one of the reasons that Tektronix acquired us is that they saw that opportunity as well. Our threats come from larger players rather than smaller startups because I think this is a high-ticket R&D game now. I think there are larger players out there looking at embedding security in routers or gateways and things of that nature, and that is where I expect to see challenges.

LR: Rich, from what Colin is saying, it sounds as if we should expect more consolidation in this space. So from Tektronix's perspective, why buy Arbor, and do you think you've gotten the drop on this market?

McBee: We did a lot of market work on this, and Arbor is a market leader. They are very well known; they've got an unprecedented footprint out there. Culturally, they are a good match with us as an organization. It's a very attractive market. We've got what we believe is a market leader, and a management team that has a lot of room to run. Danaher as a parent corporation -- the stated strategy of the company is to acquire. We are very well capitalized. This marketplace is a place that clearly we are signaling interest in. We want to head in with a well-known brand, very good technology and one that we can build on.

— Carol Wilson, Chief Editor, Events, Light Reading