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How Disruptive Technology is Transforming the WAN Optimization Market

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Disruptive technologies, also referred to as disruptive innovations, are new technologies (or innovations) that ultimately largely displace an earlier technology. The entry of a disruptive technology into the marketplace typically creates a new market, catching the industry off guard. In other words, the market doesn't expect the new technology. In addition, disruptive technologies tend to reach new consumers and further disrupt the playing field by lowering prices. In contrast, "sustaining" technologies and innovations merely evolve over time.

According to Ajit Gupta, founder and CEO of Aryaka, a cloud-based WAN Optimization company offering WAN Optimization as a service, cloud-based WAN Optimization services are disrupting the MPLS private WAN status quo by reducing price without sacrificing performance. In a recent blog post, Mr. Gupta explained, "The enterprise cloud market is locked in an old-fashioned price war. Until recently, Amazon has owned the market, but Google, never one to take a backseat, is attempting to snatch away Amazon market share by lowering prices. Amazon has responded by slashing its prices by as much as 40%." (1) In order to compete, these companies need to avoid becoming a commodity. They need to either disrupt existing business models or exploit weaknesses.

Mr. Gupta cites Uber, Airbnb, and GrubHub as examples of disruptive business models. He also explains how one company, T-Mobile, has disrupted the wireless carrier marketplace by capitalizing on weaknesses in the marketplace. Where other carriers require long-term contracts and early termination fees, T-Mobile doesn't. In fact, it now pays the early termination fees when new customers switch to its services. T-Mobile also allows its customers to upgrade their phones twice per year. T-Mobile has disrupted the industry by being strong in areas where its competitors are weak.

Mr. Gupta's company, Aryaka, is based on a disruptive business model. While its competitors emphasized hardware combined with expensive MPLS services as the solution to WAN application performance, Aryaka eliminated hardware completely in favor of a cloud-based delivery model. The WAN Optimization as a service, solution is available at a lower price point without requiring the large capital expenditures (CapEx) that its hardware-heavy competitors do. This means "you don’t have to buy expensive hardware, and don’t have to agree to expensive training, consulting and ongoing maintenance contracts." (2)

By eliminating expensive and labor-intensive hardware and delivering WAN optimization as a service, Aryaka has disrupted the industry. Its solution appeals to both the existing enterprise market as well as to smaller businesses that were not served by the status quo. Business that lacked the resources for traditional WAN optimization and MPLS can now optimize their networks without a costly investment in hardware. They can deploy in minutes (rather than months) as well as scale up or down as needed.

Rather than competing on price, Aryaka's disruptive technology changed the market. Ironically, the disruptive business model also has a compelling side effect: lower prices. In the end, customers are the real winners.

Works Referenced:

  1. http://blogs.wsj.com/accelerators/2014/05/23/ajit-gupta-how-to-compete-on-price-without-sacrificing-profitability/
  2. http://www.aryaka.com/products/wan-optimization-as-a-service/
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