F5 Networks (NASDAQ:FFIV), a provider of application delivery network, recently announced the integration of its BIG-IP products with VMware, a provider of virtualization and cloud infrastructure, to offer a combined solution for networking and security programs for its customers. F5 Networks will use the new VMware Ready program to automate key application delivery services. The new VMware software enables customers of all sizes to continue utilizing their existing investments in networking and security products, while benefiting from efficiency and agility of the VMware cloud infrastructure through validated joint solutions.
By helping to quickly locate certified solutions, the program allows the customers to lower their operational costs and management complexity and meet their compliance requirements. As a launch partner for VMware Ready for networking and security program, F5 expects to enhance the capability of the VMware software, enabling professionals to efficiently deploy and optimize application delivery services across virtualized and cloud environments.
F5 Networks currently holds around 27% share in the application delivery network market, and we believe it is capable to pull up its share to 38% by the end of our forecast period.
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Shift To Cloud Based Services and Storage Will Benefit F5
Organizations are transforming their own data centers and are turning to external, third-party cloud providers for services and storage to lower their capital and operating costs. To accommodate the dynamic needs of their clients, cloud providers are building large virtualized data centers to host a constantly changing mix of on-demand resources.
Enterprises are pursuing increasingly responsive IT deployment models and the recent F5 and VMware collaboration looks to provide technologies that make software defined data centers a reality. The integration will take advantage of the services available with the BIG-IP product line such as load balancing, SSL offloading, web application firewall etc., helping integrate application services into data center operations.
Research firm Forrester projects the global market for cloud computing to increase from $41 billion in 2011 to $241 billion by 2020.  We believe that F5 Networks is well-positioned to leverage this growth.
Our price estimate of $135 for F5 Networks is at a premium of over 30% to the current market price.Notes:
- More Predictions on the Huge Growth of Cloud Computing, Wall Street Journal, April 21, 2011 [↩]