Allot Transfers its US Video Optimization R&D Center to HQ (Israel)

Bruce V. Bigelow reported to the xconomy that "Israel’s Allot Communications is shutting down its San Diego-based operations, which came with the 2012 acquisition of Ortiva Wireless, a spokeswoman confirmed today. About 20 employees are affected by the shutdown, according to an e-mail from Maya Lustig, director of communications for Allot, which is based near Tel Aviv, in Hod Hasharon. Ortiva, which specializes in optimizing video streaming across wireless networks, had 41 employees in San Diego when the deal closed". 

Related posts:

• [Rumors]: Allot to Buy Ortiva Wireless - here
• [Done!] : Allot to Buy Ortiva Wireless - here
• Allot: Cost of Ortiva Acquisition - Less than $17M, in Cash - here
• Allot Integrates Ortiva and Oversi into the Service Gateway - here
• Allot Launches the Acquired Ortiva Video Optimization Solution - here
• Allot's Revenues from 2012 Acquisitions - here

Yaniv Sulkes [pictured], AVP Marketing, Allot Communications provided me with the following comment:

"Allot Communications views video-related solutions as a core part of its offering to its customers. As part of this view we have developed many different solutions in this area – solutions for video-caching, video-optimization, video-analytics and others. The operation and development of most of these solutions is done mainly from Allot's headquarters in Israel, while part of the video-optimization development is done from our facility in San Diego". 

Source: {Core Analysis}

"Further to our continuing goal to best support and answer our business and customer needs, Allot decided to begin a process of transferring and centralizing all video knowledge regarding markets, products and support to our headquarters in Israel. We aim to complete this process by the end of this year and as a consequence, we are gradually closing our facility in San Diego. We believe centralizing our video capability will enable us to continue to improve the solutions, services and support we provide to our customers".

  

See "Allot Closing San Diego Operations Two Years After Ortiva Buyout" - here.

Allot's Revenues from 2012 Acquisitions

Allot Communications filled its 20-F form with the SEC (here). The report has some information on the cost and results of Allot's 2012 acquisitions - Ortiva Wireless (here, here) and Oversi (here).

Rumors are that Allot expects the optimization related sales (Ortiva) to recover at the 2nd half of 2013.

• Ortiva - "The Company paid $ 10,816 in cash as consideration for all the shares of Ortiva .. The results of Ortiva's operations have been included in the Company’s consolidated financial statements since the Ortiva acquisition date. Revenues recognized from the Ortiva acquisition date to December 31, 2012 were $ 3,404 [since May 15, 2012]".
   
• Oversi - "The total consideration for the acquisition was $ 17,349, which consisted of $ 16,000 in cash and contingent consideration estimated at fair value of $ 1,349 at the Oversi acquisition date ..  Pursuant to the Oversi SPA, the Company has a contingent liability to pay additional consideration if Oversi reaches a certain threshold of bookings for the year ended December 31, 2012. As of December 31, 2012, the fair value of the contingent consideration was determined to be $ 1,088, to be paid on April 15, 2013, and is presented in other payables and accrued expenses. The change in fair value of the contingent consideration was recorded in general and administrative expenses.
  
  The results of Oversi's operations have been included in the Company consolidated financial statements since September 4, 2012. Revenues recognized from the Oversi acquisition date to December 31, 2012 were $ 1,954".

Allot Launches the Acquired Ortiva Video Optimization Solution

Allot Communications announced that it launched VideoClass "Based on a best-of-breed product by recently acquired Ortiva [for $17M - here], this application-aware video optimization solution enables mobile service providers to significantly improve the quality and efficiency of over-the-top (OTT) video delivery" 

See also - "Allot Integrates Ortiva and Oversi into the Service Gateway" - here and "About Mobile Video Optimization Market Size and Citrix" - here.

"Allot VideoClass employs optimization techniques that enable service providers to:

• Reduce the load on RAN and backhaul bandwidth by 30-50%.
• Reduce capital and operating expenditure.
• Prevent video stalls and buffering for a consistently great OTT video experience – even under highly variable and unpredictable network conditions.
• Create new revenue opportunities through service packages designed for video consumers.
• Gain insight into consumer behavior through detailed analytics on video usage"

See "Allot Launches Video Optimization Solution" - here.

[ABI]: PCRF/DPI Market to Reach $1.4B in 2013; to be Integrated with Optimization

Aditya Kaul (pictured), practice director, mobile networks, ABI Research estimates ".. the mobile portion of the policy server (PCRF), DPI, and web/video optimization market as a collective whole reach $1.4 billion in 2012 and will grow to $2 billion by end 2013. Of this, more than 70% of the market is standalone DPI and policy server related, which is growing at CAGR of 33% between 2012-17".

“While policy, DPI, and optimization have traditionally had separate ecosystem vendors, there are some indications that these functionalities might get integrated.. Although there is an ongoing debate within the industry about the pros and cons of this integration, the interworking and cooperation of these three functions is necessary to deliver smart mobile traffic monitoring, optimization, and monetization solutions”. [See Allot's recent integration of the acquired video optimization vendors - Ortiva and Oversi - here].

"By 2017, the overall mobile monitoring and optimization market is expected to reach $8 billion, with DPI, policy, and web/video optimization making up 73% of the market, from the current 50% market share. While network monitoring will remain important, the value will shift towards monetizing the traffic, making policy and DPI much more intertwined than they are today, but also be seen as a critical part of mobile infrastructure spend".

A year ago ABI estimated that "In 2016, mobile network operators will spend more than $1.8 billion on web/video optimization, more than $1.2 billion on policy management [this is lower than the previous ABI forecast - see here], more than $1.5 billion on deep packet inspection (DPI)" (here) - i.e total of $4.5B for 2016 compare to the current forecast for 2017 of $5.1B.

The DPI/PCRF market size table was updated (here).

See "Mobile Policy, DPI, and Web/Video Optimization Market To Reach $2 Billion in 2013" - here.

Allot Integrates Ortiva and Oversi into the Service Gateway

    

During the Q2 results call, in a response to an analyst answer, Rami Hadar, Allot's CEO provided some insight into Allot plans of integrating its recent acquisitions (Ortiva, Oversi) into its main product (Service Gateway).

Allot's ATCA Based
Service Gateway

".. In term of enjoying a head start and integration with platform, you are right to remember that in Ortiva, we were based on ATCA platform and we are already in a process of moving them to our ATCA platform, which is obviously much easier task than if they were doing some kind of a proprietary solution".

"With Oversi, it's a little bit different, if you may. The caching solution has two elements. One is big chunk of storage, and that's going to stay external. No point of putting that into a service gateway, but the control functions and redirecting video traffic and video control messages will be integrated very quickly alongside management. So that's on the platform integration".

See the transcript, by Seeking Alpha, "Allot Communications CEO Discusses Q2 2012 Results - Earnings Call Transcript" - here.

Optimization Deployments [153]: 3UK Deployed Allot(Ortiva) for Video Optimization

Allot Communications announced a deployment of its recently acquired video optimization solution (see "Allot: Cost of Ortiva Acquisition - Less than $17M, in Cash" - here) to 3UK, probably the "European (part of a larger group) tier1 mobile customer" mentioned in the above link.

3UK faces a huge growth in data consumption (see "3UK: New Year's Mobile Traffic Growth: Voice +10%; SMS +28%; Data +471%" - here) and announced recently it will control some heavy data subscribers and usages (see "3UK Identifies and Controls File Sharing, Tethering and High Data Use" - here).

With video optimization it adds another level of data control. ".. Three UK has deployed Ortiva Wireless' unique iVOG (internet Video Optimization Gateway) platform to help optimize Three UKnetwork costs and provide the necessary level of quality for subscribers. By reducing the stalls, or buffering, that can be encountered by people watching video over mobile networks, Three UK's customers will receive a superior video experience".

Phil Sheppard (pictured), Director of Network Strategy at Three UK said: "Three selected the Ortiva iVOG platform after a detailed RFP, lab and field trial process Ortiva's scalability advantages allowed the deployment to be paid for entirely by the savings in network expansion costs, while at the same time improving the subscriber quality of experience even under challenging network conditions".

See "Allot Announces Three UK Customer Deployment of Ortiva Wireless IVOG Platform" - here.

Sandvine: The Ups and Downs of Video Optimization

 
Few days after Sandvine's CTO warned that "buyers beware! Not all video optimization techniques are able to achieve the network savings that operators are seeking and the quality of experience that subscribers are demanding" (here), the company went further in pointing out the difference between its solution and the recently announced acquisition of Ortiva Wireless by its major competitor, Allot - although it does not have its own video optimization technology.

Sandvine announced that "..it has successfully deployed video optimization at nTelos Wireless with partner Mobixell. Sandvine’s patented divert technology has been successfully integrated with leading video optimization vendors and has been selected for six deployments worldwide in the last year alone. nTelos Wireless is one of the video optimization customers to date".
  
The Mobixell marketing team updated me that "nTelos is also a Mobixell customer in addition to the implementation with Sandvine .. the Mobixell Seamless Access Multiservice Platform at nTelos that delivers the optimization also serves a Web browsing gateway. It’s all part of a larger solution to provide services for a wide array of mobile subscriber needs".

The release does not mention optimization of Netflix traffic. According to Sandvine "Netflix and YouTube are the top two contributors of video traffic volume in mobile and fixed networks .. Netflix encrypts its video traffic using Digital Rights Management (DRM) techniques, so that data stream cannot be modified"

Source: Sandvine, Fall 2011 Global Internet Phenomena Report

So what is the differentiator, according to Sandvine? - " .. Accurately identifying traffic is a critical first step in optimizing video. Unlike certain competitive solutions, Sandvine’s granular identification and patented divert technologies create efficiencies in the optimization process and reduces traffic latency by diverting only relevant video traffic into third-party optimizers ..   Sandvine’s products extend beyond optimization and take into consideration video quality metrics [see "Sandvine Measures Youtube and Netflix QoE" - here]. Sandvine is the only Network Policy Control vendor that can provide quality metrics on streaming video such as duration, display characteristics and transport quality". 

 
See "Sandvine Optimizes Video at nTelos" - here.

Sandvine's CTO: Video Optimization might not Work for you!

 
Up until recently, DPI/traffic shaping vendors and video optimization vendors worked on a partnership basis, mainly based on joint opportunities, the need to add one solution on top of an existing one, etc. DPI vendors usually emphasized the synergy of joint solutions (such as redirecting identified video traffic to the optimization device, saving resources), and were ready to work with any vendor. The "partners" web pages of DPI vendors shows usually a number of video optimization partners (Allot, Procera, Sandvine), and some announcements were made (Procera-Ortiva, Sandvine-Mobixell/Ortiva/Vantrix).
 
Recently these opportunistic relations took the next level and turned into a strategic direction. Bytemobile announced an integrated DPI/optimization solution (here) and Allot acquired Ortiva Wireless, a small player in the optimization space (see "Allot: Cost of Ortiva Acquisition - Less than $17M, in Cash" - here).
 
Analysts predict that Procera is also looking for an acquisition following it recent public offering, maybe also in the optimization space (see "Procera Builds M&A War Chest" - here).
 
On the other hand, Sandvine's CTO, Don Bowman (pictured), issued a "public warning" about the ability of current video optimization solutions to support the real-life video traffic.
 
In a recent blog post, Don says "buyers beware! Not all video optimization techniques are able to achieve the network savings that operators are seeking and the quality of experience that subscribers are demanding"
  
"From our Internet Phenomena report, we know that Netflix and YouTube are the top two contributors of video traffic volume in mobile and fixed networks. After these big two, there is still a fair amount of traffic from numerous other video content providers, but it is a very long tail so the net value of optimizing such traffic goes down substantially (i.e. lots of effort/processing with little gain). Netflix encrypts its video traffic using Digital Rights Management (DRM) techniques, so that data stream cannot be modified. On the other hand, YouTube today is transmitted using HTTP (in the clear); however, there is a movement towards encryption using HTTPS, and Google has announced it will begin implementing HTTPS as default for its searches"
 
Don suggests that ".. when selecting a video optimization provider, the investment needs to provide a secure foundation for continuing value-add services for the operator , such as: content caching .. the ability to splice in advertisements for incremental revenue .. content filtering capacity to perform optimization at the high scale needed in growing mobile networks".
 
See "The Need to Optimize Video Optimization" - here.

Allot: Cost of Ortiva Acquisition - Less than $17M, in Cash

         
In the Q1 2012 call (here), Allot Communications management said, in reference to the recent Ortiva Wireless acquisition (here and here), that it will pay Ortiva's stockholders "less than 10% if its cash", which amounted to $165M at the end of Q1.

So far, Allot cooperated with Ortiva in one project in Latin America that hasn't turned into revenues yet. Ortiva has two tier1 mobile customers, one in the US, one in Europe (part of a larger group) - Allot hopes to use this customer base to up-sell with its DPI solution.

In addition Allot said that:

• 2 10% customers this quarter, both from EMEA (one is Vodafone, Allot's #1 customer); one more customer was between 9-10%
• Book to bill ratio was above 1 for the quarter
• Booking by verticals - Wireless 40+%,  fixed 40-%, Enterprise 18% ; 36% of booking is from North and South America (including $4M from one Latin America customer - here)
• VAS products were 12% of total booking
• Allot shows on its "Reconciliation of GAAP to non-GAAP report" the following item - "Expenses related to M&A activities and compliance with regulatory matter" for $1,045,000. The M&A part of it, relates to M&A activity that was not concluded during Q1. 

[Done!] : Allot to Buy Ortiva Wireless

   
Allot Communications announced that "it has signed a definitive agreement to acquire Ortiva Wireless, which offers the industry's most innovative solution for proactive management of mobile video .. The terms of the acquisition were not disclosed .. Ortiva will contribute between $3-5 million in revenues for the second half of 2012, with a gross margin profile similar to Allot's current level " (see "Allot Communications to Acquire Ortiva Wireless" - here).

See my previous post, with details on Ortiva, here.

Sprint Migrates from a "Basket of Tools" to Consolidated Video Optimization Solutions

 
The recent trends in traffic management are integrating multiple traffic management and optimization tools into a single solution, and moving away from simple throttling policy to more sophisticated congestion management, OTT control and quality of experience management - considering both network cost reduction and revenues generation.
 
Vendors that used to offer single functions (DPI, optimization) are enhancing their solution with additional functions - either by self-development (F5 and Bytemobile adding DPI), acquisitions (rumors of Allot buying Ortiva - here), OEM or partnerships.

All this is done to stay ahead of some of these capabilities that are offered by existing network elements - such as Cisco's GGSN in-line services or DPI functionality in Ericsson, Alcatel-Lucent or Nokia-Siemens Networks GGSNs.

A recent story by Sarah Reedy (pictured) to Light Reading shows how well this approach is accepted by Sprint.

Bob Azzi, SVP of Networks, said "When we deliver video, we we're wasting bandwidth .. the core is aware of the type of device and the content the user is demanding and only sends the bandwidth necessary for both, reducing what's required at the RF layer".

VP of Development and Engineering Iyad Tarazi (pictured) said "We used to see in the past, four to five years ago, one supplier doing caching, one doing encoding and decoding, others looking at pinching and throttling .. We're now seeing consolidation and optimization tools that are customer-friendly .. The tools still have to do all the things -- caching, encoding, decoding, etc. -- but now the tools focus on managing the network, rather than looking at the quality of the video that the content supplier is capable of delivering. That doesn't mean throttling .. it could mean sending video to a consumer that is optimized for the network speed in a specific area, instead of sending the consumer the best possible version of that video available from the content provider". 

See "Sprint's Optimized Mobile Video Strategy" - here.

[Rumors]: Allot to Buy Ortiva Wireless

Orr Hirschauge reports to The Marker that Allot Communications is going to acquire Ortiva Wireless, a vendor of video optimization solutions for mobile operators. (here, Hebrew - I was interviewed to the story).

Ortiva's solutions provides 4 main functions: Application Aware Bandwidth Allocation, Client Buffer Management, Content Aware Bandwidth Reduction and Network Aware Adaption.  Like Allot, Ortiva uses ATCA as its hardware platform, and uses blades from Radisys (former Continuous Computing products). Ortiva is listed by Allot as a partner (here).Ortiva has also relations with Procera (here) and Sandvine (here).

Allot is looking for video optimization technology for long time now, and was previously in negotiations with other vendors in this space, including Mobixell and Flash Networks (here). Such offering may compete with the DPI/optimization integrated solutions from Bytemobile (here and here) and those that are planned by F5 (here) as well as other vendors. Allot already has a video caching solution integrated in its gateway (OEM from PeerApp).

Procera Enables Ortiva's Video Optimization for 2 European Mobile Operators

   

Procera announced today that "that two leading European mobile operators leverage PacketLogic to enable a comprehensive integrated solution for video optimization. Both operators also selected the Ortiva Wireless iVOG [see below] as their preferred video optimizer .. Ortiva and Procera underwent interoperability testing that showed a 30% reduction in video throughput while maintaining video quality. Procera's PacketLogic improves capacity and extends operability lifetime by offloading almost 50% of irrelevant traffic from being processed in the iVOG. This combination provides a proven solution with a compelling and quick return on investment".

See "Two Leading European Mobile Operators Deploy Combined Procera And Ortiva Solution for Video Optimization" - here.

Video optimization is one of the best ways mobile operators may handle congestion. However, since it consumes significant processing resources, a DPI front-end may improve its efficiency considerably by forwarding only relevant traffic for optimization processing – based on the application used, subscriber service profile and the current load of the network (chain of elements connecting the subscriber).

See also "Sandvine Partners with Mobixell, Ortiva Wireless and Vantrix" - here and a recent use-case by Allot (here).

Ortiva’s iVOG™ (internet Video Optimization Gateway) is a video optimization platform designed for wireless operators to improve overall network efficiency and reduce bandwidth consumption, while simultaneously improving end-user experience. It is deployed as a proxy service in the operator network, where it minimizes video data rate on the network, maximizes the number of simultaneous video users, and dynamically modifies video content flow (via transrating) to suit the end-user’s prevailing network conditions.

Sandvine Partners with Mobixell, Ortiva Wireless and Vantrix

 

Shortly after announcing the partnership with Acision [see "Going for a Service Gateway - The Sandvine Acision Partnership" - here], Sandvine announces that "it has partnered with three global companies for end-to-end media optimization solutions: Mobixell [here], Ortiva Wireless and Vantrix [here and here].. Operators can deploy such solutions with minimal investment due to Sandvine’s patent-pending, advanced, granular method for diverting traffic, which ensures that only appropriate traffic flows are redirected to optimization platforms. Similar solutions based on simple port-based redirection result in considerable network inefficiencies".

See "Sandvine Announces Media Optimization Solutions With Three Partners" - here.

“Sandvine’s traffic redirection technology provides a flexible and reliable way for wireless service providers to deploy media optimization in their networks,” said Ron Garrison, VP Product Management, Ortiva Wireless. “Mobile video optimization amplifies the capacity of the existing network, deferring capex and reducing opex for service providers while at the same time improving their subscribers’ quality of experience.”

Another step in creating a more complete multi-function traffic management solution (rather than independent "boxes" or point solutions) - and video optimization is surly one of more important add-ons to DPI/QoS management (or vice-verse) - preferably under the control of a single policy management entity.