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Dave C�t�, CEO, Packeteer

Dave Cote So you're a feisty company in a burgeoning market loaded with tough competition, including Cisco Systems . What do you do to rise above the rest of the field? If you're Packeteer Networks , you buy a company with ties to Microsoft .

Packeteer bought Tacit Networks last year, inheriting Windows-based wide-area network (WAN) optimization technology that helps improve the performance and security of applications as they traverse networks.

Recently, Packeteer and Microsoft launched the first iShaper appliance designed to speed up and secure data in the corporate office using native Microsoft application services.

Nicknamed the "Branch Office Box," iShaper is designed to improve the performance of applications that deliver data, voice and video traffic in corporations, particularly businesses with several branches or remote sites.

The machine features intelligent tools to distinguish between recreational and critical video over the Web at a time when corporate bandwidth clogging is an issue.

Packeteer CEO Dave Côté chatted with internetnews.com about the company's technology, the competition and the future of the WAN optimization market.

Q: How has the WAN optimization market changed in recent months? Is the iShaper product reflective of any changes?

While a lot of the attention is on acceleration technologies, we really think it represents a platform for us to build from. We believe acceleration is not enough. You may solve one problem, but it's not sufficient.

Tapping into and being part of the infrastructure of our customers' branch environments, such as Microsoft systems, is important. Ninety-plus percent of how people deliver their fundamental infrastructure to their branches is through Microsoft.

Being able to deliver Microsoft services through iShaper in an integrated fashion, and understanding each other's roadmaps and the value that Microsoft is bringing in the platform and allowing us to build on top of that with our networking expertise delivers not just best in breed, but a comprehensive solution for our enterprise customers.

Q: You mentioned that competitors are focusing on acceleration, intimating that Packeteer has a more holistic view of WAN optimization. How would you differentiate the iShaper from products from rivals Blue Coat Systems  and Riverbed Technology ?

We start with intelligence. We start with that understanding of what applications are running on the network. Not just enabling the tools on our box but giving our customers insight into how and what applications are being delivered across their network.

It also absolutely enables us to help them use the right tool. SAP transactions are not an acceleration issue. They're typically a congestion issue, so using application-oriented quality of service to prioritize SAP transactions over other traffic enables you to deliver that application while accelerating your file applications. But you don't allow that accelerated file traffic to overrun your SAP application.

We also have the ability to work with voice and video. Again, the issue there is guaranteed bandwidth. You don't want something to overrun that traffic, because you want to make sure you guarantee the amount of bandwidth to maintain voice quality. Same with video, but it's a bigger bandwidth requirement.

Q: So YouTube helps your business because its videos clog up corporate networks?

Video bandwidth is a very big issue and is a bigger issue than voice because voice is pretty homogenous. If you want to deliver voice calls, you don't get into whether it's a voice call that's driving your business or whether it's a call to you grandmother. The technology is not going to differentiate that. It's going to be your company policies, etc.

Video is quite different. Next to YouTube and MySpace, there's also video conferencing. If you can't differentiate between those two things, then you can't manage your mission-critical video versus your recreational or even problematic video.

Therein is one of the differences between what we're offering and the other players, because our intelligence layer differentiates the different voice codecs, video player, as well as the different URLS, and really gives our customers a tool to set policies that will manage their traffic the way they'd like to. Not just to allow or deny access, but to provide granularity where you may allow a certain amount of video player because some of that may be listening to an important webcast.

But that's not mission critical compared to your video teleconference to all of your sites in Asia. You want to guarantee that performance.

Q: Video is obviously a current challenge. What will the future hold for the WAN optimization market five to 10 years down the road?

It may seem a little presumptuous, but it is the model that we've been following. You have to be able to deal with all of the different applications and traffic types that traverse people's networks. I don't think that problem is going to change.

People are going to want to deliver more and different types of applications and data over their networks to more and different branch locations. That is the fundamental challenge.

As we look back 10 years ago, e-mail and Internet were brand new on the scene. Then thin client applications like Citrix came along to help. With the rise of the Internet we began to see problems associated with recreational and malicious traffic.

We added business Web applications. SAP went from being a client/server app to being a Web-oriented app. Now we're looking at files. The current wave that everyone is looking at is how to deal with files and bulk transfers.

We just talked about video, which, while important in the press, is not a dominant traffic type yet. But it's becoming that. What's next?

The whole world of service-oriented architectures, more unified communications, more Web services. Five years from now, people will have to deal holistically with the traffic they're trying to deliver to their branch offices and remote sites. More and more of that traffic is going to be coming from the outside: from other partners, suppliers, customers. So it isn't only what's going on in their own datacenters, but also what's going on in and between their branches and the extended enterprise.

They have to deal with those applications. I don't know what the market will be called five years from now, but the problem won't get easier.

Q: How do you intend to compete with Cisco Systems, which seems to loom over everyone in this market?

Cisco is probably the No. 1 largest strategic competitor. While we take the other players seriously in the long term, it is companies like Cisco that represent the biggest challenge and threat to us.

On the other hand, we look at this problem holistically and as a system. I think we've tried to extend that notion with our partnership with Microsoft into the entire branch infrastructure. We think of what we do as an intelligent overlay that sits on top of the switch-routed infrastructure to deliver this intelligence that relates to the dynamic nature of the applications that people are trying to deliver.

In that context, the delivery of this as a system represents an advantage that is not trivial. Cisco can buy their way into almost anything, but at the end of the day if they don't deliver a holistic solution that customers can implement in a straightforward way across all of their applications, that is not a simple challenge to overcome.