Palo Alto to acquire CloudGenix in $420M cash dealPalo Alto to acquire CloudGenix in $420M cash deal
Palo Alto Networks will integrate CloudGenix's cloud-managed SD-WAN products to speed up onboarding of remote branches and retail stores utilizing Palo Alto's Prisma Access SASE platform.
March 31, 2020
Palo Alto Networks has inked a deal to acquire SD-WAN supplier CloudGenix for nearly $420 million in cash by the end of the year.
Palo Alto has already integrated with many SD-WAN vendors – such as Aryaka, Citrix and VeloCloud by VMware – to add security to their SD-WAN products, and this acquisition announcement further solidifies Palo Alto as both collaborator and competitor in the SD-WAN space.
Once the acquisition is complete, Palo Alto Networks will integrate CloudGenix's cloud-managed SD-WAN products to speed up onboarding of remote branches and retail stores utilizing Palo Alto's Prisma Access SASE platform. The Prisma Access platform includes a global cloud network and cloud-delivered security. Palo Alto says the combination of CloudGenix's SD-WAN services with its Prisma Access will advance its transition from SD-WAN to SASE supplier.
CloudGenix has nearly 250 customers that include Fortune 1000 companies as well as enterprises in the healthcare, retail, manufacturing, finance, banking, tech and hospitality verticals. CloudGenix's co-founders – Kumar Ramachandran, Mani Ramasamy and Venkataraman Anand – plan to join Palo Alto Networks.
Lee Doyle, principal analyst for Doyle Research, says Palo Alto recently launched a "light weight" SD-WAN capability within their Prisma Access product and the acquisition of CloudGenix is a logical next-step for Palo Alto "as a leading network security vendor to compete against the likes of Fortinet, Cisco, and Juniper that have strong SD-WAN capabilities."
Talari, Viptela and VeloCloud are among a growing number of SD-WAN suppliers that have been acquired in recent years, and Doyle expects a steady market consolidation to continue "at various price points and we'll see other technology combinations coming."
SASE gains ground
As more global enterprises rely on cloud applications and SaaS to support an increasingly mobile workforce, SD-WAN and "secure access service edge," or SASE, are gaining traction in the industry. Gartner coined the term SASE in late 2019 to describe the convergence of SD-WAN with cloud-based security functions.
Gartner research VP Andrew Lerner describes this new trend as combining "network security functions (such as SWG, CASB, FWaaS and ZTNA), with WAN capabilities (i.e., SD-WAN) to support the dynamic secure access needs of organizations. These capabilities are delivered primarily aaS and based upon the identity of the entity, real time context and security/compliance policies."
"There's no question that networking and network security are both moving to the cloud and SD-WAN is an example of an overlap of some of the functionality," says Doyle. "Having routing, firewalls, SD-WAN and WAN optimization all in one package is clearly where we're going. The challenge I have with the SASE term is it's really broad and really all encompassing."
Doyle says it would be difficult for a single supplier to deliver everything the SASE term encompasses – customer demands for customization in access to cloud applications, compliance and regulatory issues, and challenges for networking IT and security teams will take years to sort out in the WAN and security space, he explains.
"As the enterprise becomes more distributed, customers want agile solutions that just work, and that applies to both security and networking," said Nikesh Arora, chairman and CEO for Palo Alto Networks, in a statement. "Upon the close of the transaction, the combined platform will provide customers with a complete SASE offering that is best-in-class, easy to deploy, cloud-managed, and delivered as a service."
The CloudGenix acquisition will likely close in Palo Alto's fiscal fourth quarter this year once regulatory requirements are met.
— Kelsey Kusterer Ziser, Senior Editor, Light Reading
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