Kentik, ThousandEyes deals show value of network monitoring for the edge

A pair of announcements around network monitoring – one a proposed acquisition by Cisco Systems and the other a fresh round of funding for Kentik – serve as a reminder that the infrastructure that was so critical to the growth of the internet in the 1990s is just as important today.

Cisco Systems Inc. last week said it is preparing to buy ThousandEyes, Inc., a privately held application and network monitoring service firm. Cisco did not disclose a target purchase price for the software company, which helps buyers “predict, visualize and control operational behavior,” according to Cisco’s announcement. Bloomberg reported that the deal was valued at around $1 billion, citing sources.

Separately, Kentik Inc., which offers a service that presents real-time network analysis in cloud and hybrid environments, said it had received $23.5 million in equity and growth debt.

The announcements involve network monitoring, a block-and-tackle function that keeps data flowing fast and efficiently whether in a large departmental local area network or a global edge and cloud network.

Cisco is a forefather of network infrastructure with a lengthy record of spotting entrepreneurial ventures to plug into its sprawling capabilities.

Executives said this combination would address years of hectic network growth that has left many companies trying to reconcile burgeoning cloud programs, SaaS applications and, perhaps most difficult to fully visualize and manage, Internet and third-party networks. And all that has been made more acute by huge increases in online traffic recently.

Completion of the deal is expected by the end of October 2021 and will result in ThousandEyes being blended into Cisco’s Enterprise Networking and Cloud and AppDynamics units. Mohit Lad, CEO and co-founder of ThousandEyes, will work in Cisco’s new Networking Services unit in an undisclosed role.

The Kentik funding was led by Vistara Capital Partners with participation by existing investors August Capital, Third Point Ventures, DCVC and Tahoma Ventures. The firm’s clients include Cisco, IBM, Zoom and eBay.

In its announcement, Kentik claimed to have “real-time visibility into over 1 trillion traffic measurements per day across billions of users” and can “see every network connected to the Internet and every cloud and SaaS provider.”

Market developments for monitoring at the edge

The Kentik and Cisco announcements come at a time when the network monitoring field is in some areas continuing to blend in with application performance monitoring into a market that some call “digital experience monitoring.” ThousandEyes has offerings that fall into this category, as does Catchpoint, another longtime player in the monitoring arena.

Catchpoint recently announced a new service for adding in user sentiment analysis to its portfolio of synthetic, network, endpoint and RUM monitoring capabilities. In short, this means user-reported feelings about experience from sources such as a free browser tool and social media services like Twitter.

Companies can use the service to factor in end-user emotions (along with network and application data) about outages and performance degradation of services to gauge the severity of an issue and to correlate it to certain geographies, for instance.

Analyst Perspective

Monitoring network and application performance is paramount because edge computing consists of using a highly distributed set of resources that are interconnected with network services. Developers need to be able to continuously monitor the entire application lifecycle to effectively harness the promise of edge computing.

One network administrator at a financial services firm recently told us “For our network, we measure outages in seconds…  A minute outage is [costing us] over $1m.The more things I can to do to decrease the detection window and get into mitigation window, the better.”

Companies like Catchpoint, Cisco-ThousandEyes, Kentik, Netscout, New Relic, Nokia Deepfield, and others can easily show value against the cost of service outages. Additionally, services such as Kentik’s can be used to trace and mitigate security issues such as DDoS attacks, which provide significant value in and of itself – enough so that Kentik has a lot of customers in the network service provider and cloud provider space.

We see the value of these companies’ solutions continuing to grow in importance as the use of compute resources becomes more atomized and distribute. Consequently, partnerships and further acquisitions are expected in the next 12 months now that Cisco has made a definitive move in the space.

Jim Davis, Principal Analyst, Edge Research Group

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