The emerging mobile security gateway market has proven tougher than expected for embedded systems specialist RadiSys Corp., which has decided to halt investment in its SEG-100 product and rely instead on funding from the systems vendor customers that buy its blades.
The company announced the decision during its fourth-quarter earnings conference call. (See RadiSys Loses $5M in Q4.)
According to the transcript of the call published by Seeking Alpha, CEO Brian Bronson told investors and analysts that while many of its product lines were performing well (including small cells and 4G voice/VoLTE), the company has "made difficult decisions to stop doing things where the product was approaching end of life or revenue profit expectations were too far in the future and the market opportunity was not material enough to warrant continued investment. ... One such example is our Security Gateway where we began investing a couple of years ago, have good initial traction with some important customers yet shipping revenue generating units remained at risk and didn’t outweigh the continued necessary investments."
As a result, "we have changed our go-to-market strategy on Security Gateway to align its development funding model with the rest of our solution portfolio where we’ll require customers to fund the product development cost," noted the CEO. "This is a change for our customers and puts future product volumes at risk, however, it's more aligned with their ability to fund and take the product to market."
Heavy Reading Senior Analyst Patrick Donegan says the move reflects the caution mobile operators are showing in terms of deploying new security platforms.
"The market volumes in 3GPP SEG products are not as high as Radisys expected, as many operators are rolling out LTE without 3GPP security across the S1 and X2 interfaces, at least at this stage of the market," noted Donegan in an emailed comment.
"The competition for available volumes is also strong, with across-the board mobile network security players such as Juniper Networks Inc. and Check Point Software Technologies Ltd. scoring well with the SRX and 61000 platforms as well as all the IP router vendors also supporting IPsec termination in their core and edge router portfolios," he added. (See Security Vendors Set Sights on Mobile Operators.)
— Ray Le Maistre, International Managing Editor, Light Reading