Silver Peak just finished a record fiscal year in July. Our total sales were up over 30%, and sales to new customers were up almost 50%. We truly are gaining momentum in the marketplace with our product leadership and we remain bullish on the market opportunity for virtual WAN acceleration deployments.
Virtualization has been a huge catalyst for our business and has allowed us to expand our addressable market. Virtual sales have grown to almost 20% of our business and we expect that will grow to 50% in the next year or two. Virtual products represent the fastest growing segment of our business with new customers deploying virtual WAN optimization from the get-go and long-standing existing customers expanding their installed base with Silver Peak virtual machines.
The demand we see for our virtual technology is very broad-based and not simply concentrated in the United States. For instance, over half of our business in Australia is virtual, and about 70% of our business in Latin American is virtual. In many cases, the economics and logistics dictate that the cost advantages of virtual technology are even more pronounced in some international markets.
So, why is virtual taking off so fast now? First, the misconception that virtual does not perform as well as physical has been disproved. Last month, in a detailed product review conducted by InfoWorld Test Center editor Keith Schultz, Silver Peak was proven to pack “superior WAN optimization into a virtual machine.” The review concluded that “regardless of the link speed and latency, the [Silver Peak] VX optimized WAN traffic as well as or better than a comparable physical chassis” from Riverbed—full stop, end of story.
Secondly, it’s becoming more clear that the market has a strong preference for virtual technology because it provides a much more “cost-effective” solution. With virtual products, customers can avoid the expensive and all-too-frequent vendor-imposed hardware refresh. In the same InfoWorld product review mentioned above, Silver Peak’s virtual WAN optimization scored a perfect “10” for value.
Virtual really is a win-win in terms of making it easier for customers to access and deploy WAN optimization technology. We created our virtual marketplace about eight months ago, where we offer all of our products online for free, self-service trials. Today, our marketplace is nearing 20,000 downloads of our virtual products. This has been a real boon to our business and really changes the way technology like this is delivered to the market.
Virtualization has also created a lot of new innovations and given us a lot of additional product ideas to make our technology more applicable to a wider audience. We are using virtualization and software-defined networking (SDN) to make WAN optimization even simpler, easier and more cost-effective for customers to utilize anywhere in the world. This is evident in our recent Velocity and Agility initiatives.
Velocity and Agility both leverage our core virtual WAN optimization technology. With Silver Peak Velocity, storage owners can instantly utilize WAN optimization to improve their recovery time and recovery point objectives (RTO/RPO), and lower their costs for WAN bandwidth for offsite replication. It’s really a way of deploying WAN optimization technology in a very clean, consistent and simple fashion that directly benefits storage managers.
Silver Peak Agility leverages SDN to make WAN optimization available on a very granular level in a virtualized environment. It enables a VM administrator, from VMware vCenter or another virtual management console, to deploy WAN optimization on a VM by VM or workload-by-workload basis. It essentially takes WAN optimization from the traditional network-defined domain and directly applies it to the virtual machine domain, making it easier and more cost-effective for virtualization and server admins to address specific application problems.
Not all customers are necessarily ready for virtualized network elements, so that’s why we continue to offer our physical appliances as well. Most of our largest customers end up purchasing a mix of physical appliances for some locations and virtualize machines for other locations, so having both and supporting the entire range of hypervisors really gives the customer the broadest selection of technologies that fits into their individual IT infrastructure.
Virtualization today is attractive not only to the traditional early-adopter type of customer, but to a broad base of customers across all vertical segments and all geographies around the world. This market clearly has legs and we really expect it to dominate the requirements for WAN optimization for years to come.