Analyst Report: F5 Losing Accounts, Sales Personnel to Citrix

In an industry overview of the communications-equipment market, analysts at  JMP Securities say F5 Network is losing key web-traffic-management accounts to Citrix, which also is said to be gaining field-sales personnel at F5’s expense.

According to JMP analysts Samuel Wilson and Jonathan Curtis, Citrix Systems’ NetScaler traffic optimizer is reputed to be the “flavor of the month" with many prestige accounts, offering the right mix of features and performance at a reasonable price. F5’s BigIP application-traffic box is said to offer similarly compelling features and functionality, but at a higher price.

JMP also says that at least four F5 sales people left to join Citrix during the September quarter.

It’s not all bad news for F5, however, with JMP reporting that a number of resellers indicated that F5’s business was solid in the September quarter. With F5 still ascertaining how it will be affected by investigations into stock-option accounting, the company’s forthcoming earnings release is expected to be limited in detail and scope.

The challenge for F5 now is to bolster the integrated functionality of BIG-IP’s TMOS-based modular architecture in a disciplined fashion. There might be more that F5 could do with BIG-IP to accelerate the delivery of video traffic, for instance, and it could add selective security capabilities that competing products don’t possess.

F5 needs to be careful to take these actions for the right reasons, though; that is, to pursue them because of customer demand or anticipated market need rather than simply because it can be done and might add a feature bullet that its competitors lack.

Product management hasn’t been a significant problem at F5 in the past, however, and I don’t think it will be an issue this time. Citrix apparently is taking a strong fight to F5 at the moment, but can Citrix maintain its focus and continue its gains against F5 while attempting to execute on a major WAN application optimization ("branch-office box") initiative with Microsoft?

The battle between Citrix and F5 — not to mention a looming Cisco — has been joined, but it’s a long way from over.

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