The $925 million deal will integrate Silver Peak’s technology natively into the Aruba Central platform, to provide a broader comprehensive edge to cloud SD-WAN solution.

In 2018, Hewlett Packard Enterprise [HPE] announced a strategic plan to prioritize the intelligent edge with an investment of $4 billion in Intelligent Edge over four years. Today, the company used almost a quarter of that to buy an SD-WAN pioneer, spending $925 million to buy Silver Peak. The plan is to integrate Silver Peak into HPE’s Aruba networking business unit. The deal is expected to close in the fourth quarter of HPE’s fiscal year 2020, which runs from August to October.

“This acquisition will extend Aruba’s technology leadership in the large and fast growing SD-WAN section of the market,” said Antonio Neri, HPE’s President and CEO, in a conference call Monday morning announcing the deal. “Combining these two industry leaders will accelerate cloud transformation. Together we can provide enterprises with a comprehensive edge to cloud solution, for campus data centre, branch and remote workers. This is an important step to connect all edges and all clouds.

“We needed to act fast to capture a part of the market that is growing very fast,” Neri added, stressing that Silver Peak is a complementary asset with intellectual property and talent. He also stressed that the uncertain times created by the pandemic and its economic impact makes it more important to accelerate innovation, through this deal.

Silver Peak started out in 2004 as a WAN optimization vendor, and made the decision to pivot to the nascent SD-WAN market in 2015, in SD-WAN’s very early days. They are a top right player in the Gartner WAN Edge Infrastructure Magic Quadrant, behind only VMware. Their core customer base is in the U.S., with some presence in Canada. Their presence in other geos worldwide is not strong, but from HPE’s perspective, offers major opportunity for growth.

“SilverPeak is still mainly US-centric, but we can use our global sales channels to expand that,” said Keerti Melkote, president of Intelligent Edge for Hewlett Packard Enterprise and founder of Aruba Networks.

Melkote also noted that Aruba’s strength has been primarily in the wired switching market ($24.7 billion) and wireless LAN markets ($5.7 billion), both of which have projected 3% CAGR. SD-WAN today is a much smaller market, at $2.3 billion, but has a projected CAGR of 21% through 2024.

“Today less than 20% of enterprises have an SD-WAN capability, but that is projected to 60% by 2024,” Melkote stressed.

Melkote discussed the specific contribution that Silver Peak brings, and how it will relate to SD-Branch, launched in 2018 to integrate Aruba’s SD-WAN products with Aruba management through Aruba Central.

“What Silver Peak adds is WAN transformation capability to the cloud,” Melkote said. “It gives us the opportunity to give a completely unified comprehensive end to end edge solution for remote, branch office, cloud, campus and data centre. This combination will be the first of its kind in the industry that allows a cloud-native approach.”

Melkote discussed the plans to integrate Silver Peak’s technology and personnel, and how the business will be organized. David Hughes, Silver Peak’s founder and CEO will join the company after the deal closes, and will continue to head up the Silver Peak business, although his precise role was not disclosed.

“Initially, the unit under David will report directly to me,” Melkote said. “We will initially focus on growing our international presence. The R&D expectation is that the technology integration will be straightforward and achievable in the first few months. We will integrate it all natively in the Aruba Central platform.”

“The big thing from our perspective is that this provides us with a much broader Go-to-Market, both from an international point of view, but also in channels,” said David Hughes. “Our growth has been gated by the scope of the investment we could afford to make in growing a broad Go-to Market.”