Gigamon is best known for building a range of network monitoring products designed to work with physical network devices. That presents a challenge when the world starts to use networking devices that are less and less physical and more just fancy software running in the nebulously defined ‘cloud’.
In the traditional, physical networking world, network traffic can be intercepted by passing it through a specific device, either by making it a “bump in the wire” that logs everything flowing through it, or by using an existing device to make a copy of traffic and forward it to the monitoring system, such as SPAN ports.
That doesn’t work in the cloud where you have virtual machines connected over virtual networks. You never even see the physical network topology that connects everything together.
Gigamon has done quite well out of its main business of intercepting traffic on network wires with special devices installed in datacenters. Revenues have climbed steadily from $68 million in FY 2011 to nearly $311 million in FY 2016. Profits have been a little more hit and miss, with net income sliding from $10 million in FY 2011 to a loss of $41 million in FY 2014 on revenue of $157 million, then rebounding to profit in both 2015 (an anaemic $6 million) and 2016 (a blockbuster $49 million).
The return to profit appears, on my analysis, to be largely a result of simply running the company better and generating sales more effectively. Making fewer mistakes, essentially, and having products and services that customers want to buy.
Part of this is driven by enterprises suddenly discovering that security is something they should care about and spend money on. Some of their newfound vigilance is finding its way into Gigamon’s coffers, and this trend is likely to continue as people discover just how insecure everything is if you bother to look.
But Gigamon still needs something for a world where an important subset, at the very least, of an organization’s data, is inside one or more clouds.