Tuesday, December 18, 2012

[Wunderlich]: What's Slowing-down the DPI Market?

Matthew S. Robison, Analyst, Wunderlich Securities downgraded Allot Communications stock (to Hold - see report below and here). His reasons are not specific to Allot, and may be applicable to the other pure-play DPI vendors (i.e. Procera and Sandvine).

The first reason relates the DPI potential in the US market, and especially to the yet nearly untouched wireless and fixed giants AT&T (and Verizon).

An earlier report about Procera claims that "Verizon seems to be ahead of AT&T as far as interest in deploying DPI technology. In 2013, opportunities in the U.S. lie with cable operators and fixed line operators like Frontier and Windstream" (here).

Robinson says that "We believe U.S. operators became more concerned about net neutrality and regard policy enforcement of tiered pricing, which is a core function of Allot products, with lower priority. Checks indicate U.S. mobile operator deployment of DPI tends to focus on analytics, which does not require as much Allot equipment as policy enforcement and can also be accomplished by other types of products". 

 Other claims are mainly about the competition from embedded products - something that never goes away when evaluating standalone DPI products (and many other networking devices specializing in specif functionality). Cisco is mentioned although all major telecom equipment vendors offer some level of DPI. 

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