First Mover Advantage, Aryaka Networks and Zscaler

Jay Chaudhry, CEO of Zscaler, envisions a time when their new product Zscaler Shift enables customers to move the router from the perimeter to the cloud. Aryaka Networks has introduced a new service called Network onDemand that replaces MPLS with network as-a-service, based on metered usage and pricing. Both services aim to disrupt the traditional MPLS market, and network optimization appliance industry. Their value prop to the enterprise is “change the old static approach to WAN communications, constrained by hardware and bandwidth limitations, to a more robust model that scales on demand, built for cloud applications, eliminating bandwidth caps, all done in a more cost effective manner.

The public is now witnessing old business models giving way to new business models in the WAN Carrier sector. It’s only a matter of time, maybe 4-6 years, before carriers start feeling it in their balance sheet. What makes Aryaka and Zscaler interesting is their hybrid business models that takes the best bits and chunks from many companies including Akamai, FireEye, Level 3, Riverbed and F5 Networks. For now, Aryaka Networks and Zscaler are all alone in their respective niches, not only being the market leaders, but also having the first mover advantage.

Aryaka is like a B2B CDN and WAN as-a-service cloud Telco provider, sort of. Zscaler is like a cloud based FireEye with a cloud Telco mix, and a little McAfee. As you can tell, sometimes it’s hard defining exactly what new disruptive hybrid companies do, but that mystique is what makes them dangerous for the competition, as they do what competitors do with a broader feature set the crosses over into many technology sectors. For example, Aryaka competes against Akamai, Level 3, and Riverbed.

First Mover Advantage, Aryaka Networks and Zscaler

Aryaka and Zscaler are visionaries creating a next generation communication service that is secure, cost effective, easy to setup and maintain, that’s designed for an ecosystem that supports backend applications like Oracle and SAP, while at the same time support cloud apps like Salesforce, Dropbox, Youtube, Gmail, Facebook, and LinkedIn. Carrier MPLS is in for a big surprise. Now let’s try to predict what impact the network as-a-service industry might have on the traditional MPLS carrier business.

Is Aryaka and Zscaler going to impact the MPLS Carrier market in the same way that WhatApp had on the Wireless Carrier market for texting? I say it is once network as-a-service catches fire taking off in the next 4-6 years and going mainstream. Is it possible MPLS Carrier revenue might drop by 30% to 50% if enterprises decide to ditch MPLS for Aryaka and Zscaler like companies? It’s very possible. Right now is just a gut feeling but it’s going to be interesting to see how AT&T, Level 3, and the Riverbed’s of the world respond.  The cloud is destroying old industries, and creating news ones, this one is next.