Palo Alto Networks Acquires CloudGenix for USD 420 Million

By Telecom Tech Outlook | Friday, June 19, 2020

Palo Alto's move is similar to that of fellow firewall vendor Fortinet, which has also made a move onto the SD-WAN field

Fremont, CA: Palo alto Networks, former security partner for SD-WAN vendors, announced the purchase of CloudGenix for USD 420 million on Tuesday. With this all-cash deal, the former security partner becomes a competitor in the SD-WAN sector. Palo Alto Networks is expected to close its fiscal fourth-quarter once it clears the usual regulatory hurdles. The increased security by SD-WAN vendors has grown to become a significant trend over the past few years, generating an increase in sales for Palo Alto Network's firewall virtual network functions. CloudGenix was rumored to be on the market last year. The deal with Palo Alto Networks marked what could be more consolidation among the 60-plus vendors in the marketplace.

"This is the classic convergence between SD-WAN and network security," said Lee Doyle, principal analyst at Doyle Research. "This gives Palo Alto an SD-WAN feature as part of its security offering. It gives them one of the leading independent SD-WAN players. It also gives Palo Alto CloudGenix's customer base and leading-edge technology to incorporate into their offer." Post-acquisition, CloudGenix's cloud-managed SD-WAN products will be integrated with Pal Alto Network's cloud-based Prisma Access security to accelerate the on-boarding of remote branches and retail stores.

Palo Alto stated that the combination of the two products would extend the breadth of the Prisma Access SASE platform, address network and security transformation requirements, and accelerate the shift from SD-WAN to SASE. SASE defines a sub-trend in SD-WAN, which includes integrating SD-WAN with cloud-based security applications.

CloudGenix was founded in 2013 as a software company and had approximately 250 customers, including a few Fortune 100 companies. For security, CloudGenix worked with Palo Alto Networks, Symantec, and Zscaler, and for cloud, it has partnered with Microsoft and Amazon. CloudGenix announced a USD 65 million funding round last year to bring its total funding to USD 100 million.

Palo Alto's move is similar to that of fellow firewall vendor Fortinet, which has also made a move onto the SD-WAN field. While Fortinet initially made its mark as a security vendor that worked with pure-play SD-WAN companies, several years ago, it started offering its flavor of SD-WAN backed by its security portfolio.

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