Application delivery controllers (ADCs) are Layer 4-7 devices that evolved out of the load balancer industry. ADCs optimize applications deployments within a data center, performing a variety of tasks such as SSL offloading, web application firewalling, and application acceleration. Websites use them extensively but enterprises also make broad use of them for big and complex enterprise applications like ERP systems.

Gartner’s Magic Quadrant (MQ) is a market assessment device used to evaluate both the ability of vendors to build effective and innovative products (completeness of vision) and their ability to market and sell those products (ability to execute).

The Leaders (high ratings in vision and execution): F5 Networks, Citrix Systems and Radware

F5 and Citrix remain leaders in the application delivery controller (ADC) market for yet another year. Citrix drew praise for being a leader in virtualized ADCs and its rich features and deep understanding of applications.  Gartner sees good potential for Citrix to bundle its virtual ADC with its Xen hypervisor products.

F5 continues to dominate in both technology and sales. It has strong customer loyalty, due in part to its DevCentral user community portal and its iRules scripting language and iControl API — technologies that have made F5′sADCs extremely customizable. Gartner cautioned that F5 is very reliant on hardware innovation; whereas competitors are doing more in software. Some vendors, like Zeus Technology, doing nothing but software, relying on industry standard servers for deployments of their technology. Gartner claims F5 also has limited features and functionality in its lower-end hardware, forcing smaller customers to spend a lot of money to get the features they want.

Radware, meanwhile, has climbed into the leader category from the visionaries box, thanks in part to the successful integration of its Nortel Alteon acquisition.  Analysts praised Radware’s vision for how ADCs fit into virtualized and cloud architectures.

Visionaries (high rating for vision): Zeus Technology, Strangeloop, ActivNetworks and Aptimize.

Here’s where things get a little interesting. Gartner has added three newbies to the MQ this year and all of them are here in the visionaries box, joining the software-based ADC vendor Zeus Technology. ActivNetworks, Aptimize and Strangeloop are the new players here and each of them has a unique specialty (Technically, Aptimize is straddling the line between visionary and niche player).  ActivNetworks sells a virtual ADC that optimizes mobile traffic and video streaming.  Aptimize focuses on messy, browser-based apps. Strangeloop specializes in HTTP optimization. Gartner says these new vendors, particularly Aptimize and Strangeloop, are often deployed in tandem with ADCs from one of the more advanced vendors on the market.

Challengers (high rating for execution): None, same as last year.

Niche Players (low ratings for vision and execution, but generally considered good and viable options for specific environments): Cisco Systems, A10 Networks, Brocade, Array Networks, Barracuda Networks and Crescendo Networks.

Despite holding the number two market share position, Cisco continues to remain in a niche player. Gartner says Cisco makes most of its money here in straightforward load balancing and it has limited application expertise compared to other vendors, which inhibits its ability to help with complex applications.

VMware, Cisco and EMC formed the VCE (Virtual Computing Environment) coalition late last year, which introduced the vbBlock Infrastructure Package, a modular data center package that’s supposed to power cloud computing. It consists of fully integrated and validated bundles of software, servers, storage and network gear.  I guess Eschenbach thinks we, the media, are making too much out of the VCE coalition. But how can you avoid hyping a strategic relationship between the world’s biggest virtualization vendor, the world’s biggest storage vendor and the world’s biggest networking vendor?

And besides, VMware has more than a strategic relationship with these two companies. EMC owns 80% of VMware. In 2007, Cisco bought its own stake in the company. Yes, Cisco owns just 1.5% of VMware, but that’s probably about 100% more of an ownership stake than any VMware customer currently holds.

VMware has done a good job of staying vendor agnostic, which is important since enterprises want to be able to run a hypervisor on whatever hardware they have in their server racks. But tight relationships with partners (and part owners) will continue to be a fact of life. VMware faces some serious competition in the future from Citrix Xen and Microsoft’s Hyper V. At Interop last month, consultant Jim Metzler, of Ashton Metzler & Associates, surveyed attendees by show of hands during a panel session on virtualized application delivery appliances. First he asked attendees whether they were currently VMware shops. Nearly all of them raised their hands. Then he asked them if they expected VMware to be the only hypervisor vendor in their data center two or three years from now. No one raised a hand.

A future is coming where VMware won’t be the de facto hypervisor in data centers. How will VMware hold onto market share when Microsoft is giving away Hyper V? Advanced and innovative features and functionality is one answer. Another answer is continued strategic partnerships with key vendors, like EMC and Cisco.

Nortel bought Alteon in 2000 for $6 billion in an effort to keep pace with Cisco, which had bought a competing company,  ArrowPoint Communications, just months prior for $5.7 billion.

Nortel is currently restructuring itself under Chapter 11 bankruptcy protection. According to U.S. bankruptcy law, the sale must be conducted at auction, so other companies have an opportunity to best Radware’s offer before the sale is finalized.

In its announcement of the deal, Radware said the Alteon products would be sold under the brand Radware Alteon. The company announced that it would offer a five-year support plan on Alteon products to ease the worries of existing Alteon customers. Radware plans to hire some of Nortel’s employees, it said.

Other vendors in the application delivery space have been trying to capitalize on the uncertainty surrounding Nortel and its Alteon line. For instance, F5 Networks announced plans to offer up to $9,000 worth of credit to companies that agree to trade in their Alteon switches for F5′s competing Big-IP switches.

If consummated, Radware’s acquisition of Nortel’s Alteon business will solidify its position as a strong competitor to F5, Cisco and Citrix in the application delivery networking market.