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F5 Networks is a leading provider of technology that optimizes the delivery of network-based applications and the security, performance and availability of servers, data storage devices and other network resources. F5’s products collectively simplify the management of data center operations and delivery of services across diverse data center resources.
F5 Networks pioneered load-balancing technology that distributes internet traffic evenly across multiple servers, making them look like a single device.
Application delivery network solutions continue to be a fast growing segment in the enterprise networking market. The need for enterprises to invest less in building and owning a new datacenter and to optimize the existing facilities has led to increase in demand for application delivery products, which deliver the same. Moreover, the shift to cloud based applications and storage has also driven up the demand for application delivery products.
F5 continues to derive a significant portion of its revenues from service and maintenance contracts. Its high quality of service is usually a selling point for its products.
There is a growing adoption of advanced video communications in the enterprise segment. Web-based video conferencing and network management is expected to grow faster than average business video conferencing.
F5 is facing competition not only from new entrants in the ADC market, but also from native cloud-based service providers. Traditionally, ADC vendors have focused on helping customers manage applications in their own data centers. However, as more and more applications are now being deployed in Cloud data centers, ADC vendors are increasingly focused on evolving their support for applications on the cloud. Consequently, traditional load balancing companies, such as F5 Networks, have to compete with the offerings of cloud vendors, such as Amazon. We can expect cloud-based load-balancers to command a larger percentage of the application delivery controller market in future. This can have a negative impact on F5’s revenue growth too.
With increasing network complexity, reducing security risk is an important criteria for enterprises. Over the years, data theft technology has become more sophisticated and the global cyber-crime market is currently sized at over $100 billion.