Blue Coat Systems

Blue Coat Systems was a United States information-technology company that supplied hardware, software, and services for enterprise cybersecurity, web traffic control, and network performance management. It began in March 1996 in Redmond, Washington, as CacheFlow, Inc., founded by Michael Malcolm, Joe Pruskowski, and Doug Crow. The original business was built around internet caching appliances: systems that stored frequently requested web objects and delivered them locally, reducing bandwidth use and improving access speed for internet service providers and corporate networks. CacheFlow introduced its first product, the CacheFlow 1000, in 1998 and later expanded its appliance range with products such as the CacheFlow 500, CacheFlow Server Accelerator, and CacheFlow Client Accelerator. The company became a prominent participant in the late-1990s caching market and completed an initial public offering in November 1999. Its shares rose sharply during the dot-com boom, even though the company was not profitable and the broader caching market remained immature. After the technology bubble collapsed, demand for standalone caching products weakened and the company’s market value fell substantially. The business responded by moving decisively into internet security. It introduced the Security Gateway product line and increasingly focused on appliances that could authenticate users, enforce corporate internet-use policies, scan traffic for malware, filter web content, manage bandwidth, and inspect or control encrypted connections. In 2002, CacheFlow changed its name to Blue Coat Systems, a name intended to suggest a protective guard or police officer. By that time, security products accounted for most of the company’s revenue, while caching became part of a broader network-management portfolio. Blue Coat became best known for the ProxySG family of secure web gateways. These appliances were deployed behind corporate firewalls to mediate employee and branch-office access to the internet. They could filter websites, apply usage policies, identify users, scan web traffic and attachments, and support controls for applications such as video streaming and instant messaging. The company complemented ProxySG with products and services for URL categorization, spyware prevention, remote access, WAN optimization, application performance, cloud security, and security intelligence. Consumer-oriented products included K9 Web Protection, a free web-filtering and parental-control tool. The company expanded through acquisitions, including Springbank Networks, Entera, Ositis Software, Cerberian, Permeo Technologies, Packeteer, S7 Software Solutions, Crossbeam Systems, Solera Networks, Norman Shark, Perspecsys, and Elastica. These transactions broadened Blue Coat from a web-appliance vendor into a more diversified security and network-performance provider. Technologies from Elastica, Solera Networks, and Norman Shark were incorporated into cloud-security, application-visibility, malware-analysis, and security-intelligence offerings. Blue Coat was taken private by Thoma Cressey Bravo in 2011 for approximately $1.3 billion and was later acquired by Bain Capital in 2015. It prepared another public offering in 2016, but withdrew the plan after agreeing to be acquired by Symantec for $4.65 billion. The acquisition closed on August 1, 2016. Blue Coat chief executive Greg Clark became Symantec’s chief executive, while Blue Coat executive Michael Fey became Symantec’s president and chief operating officer. Blue Coat’s products and technologies were subsequently integrated into Symantec’s enterprise-security business. In 2019, that enterprise-security business became part of Broadcom following Broadcom’s acquisition of Symantec’s enterprise assets.

Blue Coat Systems originated as CacheFlow, Inc., founded in March 1996 in Redmond, Washington, by computer scientist Michael Malcolm, Joe Pruskowski, and Doug Crow. The founders initially pursued appliances that cached frequently accessed web content so internet service providers could reduce repeated downloads and improve response times. The company raised early venture and angel financing, moved its headquarters to Silicon Valley in 1997, and released the CacheFlow 1000 in January 1998. The CacheFlow 100, CacheFlow 500, and CacheOS followed as the company developed a broader caching platform. The late-1990s internet boom created strong investor enthusiasm for caching technology. CacheFlow expanded its financing, integrated its products with Akamai technologies, added multimedia caching support, and introduced server- and client-acceleration product families. It went public on November 19, 1999, raising approximately $132 million. The offering occurred while the company was still reporting losses and while the commercial adoption of caching remained uncertain. CacheFlow’s stock appreciated dramatically during the dot-com boom, but the company subsequently lost most of its market value as technology stocks declined and customers proved reluctant to deploy standalone caching systems at the expected scale. During 2000 and 2001, the company began redirecting its strategy toward network security. Its Security Gateway appliances were designed to sit behind corporate firewalls and inspect internet traffic, enforce access policies, authenticate users, scan for malware, filter content, and manage bandwidth. This change was commercially important because competing caching vendors were leaving the market and most of CacheFlow’s revenue was increasingly coming from security products. In 2001 and 2002, the company adopted the Blue Coat Systems name and made internet-security appliances its central business. The name was intended to communicate the idea of a protective authority or guard. The company’s principal enterprise product became the ProxySG secure web gateway. ProxySG appliances controlled traffic between employees, branch offices, and the public internet. Their capabilities included URL filtering, user authentication, policy enforcement, malware inspection, bandwidth controls, and, in relevant deployments, visibility into encrypted traffic. Blue Coat also developed or acquired complementary products for spyware protection, remote access, application control, network acceleration, and web categorization. Its offerings expanded beyond large enterprises to smaller businesses through bundled products and channel partnerships. Blue Coat used acquisitions to broaden its technology base. It acquired Springbank Networks in 2000 and Entera later that year, followed by Ositis Software, Cerberian, Permeo Technologies, and NetCache assets from NetApp. The 2008 acquisition of Packeteer added WAN optimization and application traffic management, including the PacketShaper line. Later transactions brought in Crossbeam’s security-appliance technology, Solera Networks’ network-forensics and big-data security capabilities, Norman Shark’s malware technology, Perspecsys’ cloud-data security technology, and Elastica’s cloud-application security capabilities. The resulting portfolio combined web gateways with cloud security, application visibility, network intelligence, and threat analysis. Blue Coat became profitable in 2005 and continued to reposition itself as a security platform company. It launched products such as Spyware Interceptor, expanded remote-access and SSL-VPN capabilities, introduced K9 Web Protection for consumer web filtering and parental control, and added application-management functions to PacketShaper. In 2009, it restructured, eliminating approximately 280 jobs and closing several facilities. In 2010, Michael J. Borman became chief executive officer; he was replaced by Greg Clark in 2011. David Murphy became president and chief operating officer in 2012. The company’s products also generated controversy because secure web gateways are dual-use technologies. They can protect corporate networks but can also block websites, inspect communications, and support surveillance. In 2011, Telecomix published data that it said came from Blue Coat appliances operating in Syria. Blue Coat acknowledged that its systems were being used there, while maintaining that they had been sold through intermediaries for an Iraqi government customer. The company later announced that it would stop providing updates and support to systems operating in Syria. In 2013, the U.S. Bureau of Industry and Security announced a civil export-control settlement with a Dubai reseller concerning transfers of Blue Coat products to Syria. Researchers also documented Blue Coat devices in several countries associated with internet censorship and surveillance. In 2015, the company faced criticism after it pressured researcher Raphaël Rigo to withdraw a conference presentation concerning ProxySG. Thoma Cressey Bravo acquired Blue Coat in December 2011 for approximately $1.3 billion. Bain Capital acquired it in March 2015 for approximately $2.4 billion, and Blue Coat began preparing another IPO. In 2015, Blue Coat launched an endpoint-detection-and-response alliance ecosystem and the Global Intelligence Network, which incorporated technology from recent acquisitions. On June 2, 2016, the company filed plans for another public offering, but it abandoned those plans after Symantec agreed to acquire it for approximately $4.65 billion. The transaction closed on August 1, 2016. Greg Clark became Symantec’s chief executive and Michael Fey became Symantec’s president and chief operating officer. Blue Coat’s products were folded into Symantec’s enterprise-security business, which Broadcom acquired in 2019.

1. 2019Enterprise-security business transferred to Broadcom

   Blue Coat technology became part of Symantec’s enterprise-security business, which was sold to Broadcom in 2019.

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2. 2016Acquired by Symantec

   Symantec completed its approximately $4.65 billion acquisition of Blue Coat on August 1, 2016.

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3. 2015Bain Capital acquisition and cloud-security expansion

   Bain Capital acquired Blue Coat, while the company expanded cloud-security and security-intelligence capabilities through acquisitions and product integration.

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4. 2011Acquired by Thoma Cressey Bravo

   Blue Coat became privately held in a transaction reported at approximately $1.3 billion.

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5. 2008Packeteer acquired

   The acquisition expanded Blue Coat into WAN optimization and application traffic management.

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6. 2005First reported profitability

   Blue Coat became profitable after its transition from caching toward security appliances and services.

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7. 2002CacheFlow renamed Blue Coat Systems

   The company adopted the Blue Coat name and made enterprise internet security its principal strategic focus.

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8. 2001Strategic shift toward security

   The company introduced Security Gateway products and began moving away from a primary focus on internet caching.

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9. 1999Initial public offering

   CacheFlow completed its IPO on November 19, 1999, raising approximately $132 million.

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10. 1998First CacheFlow appliance released

    The CacheFlow 1000 entered the market as an appliance for storing and serving frequently requested web objects.

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11. 1996CacheFlow founded

    Michael Malcolm, Joe Pruskowski, and Doug Crow founded CacheFlow, Inc. in Redmond, Washington, to develop web-caching appliances.

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An enterprise network-security and traffic-management provider focused on controlling, inspecting, securing, and optimizing web communications.

• ProxySGSecure web gateway

  Blue Coat’s flagship secure web-gateway appliance family. ProxySG products mediated enterprise and branch-office internet access, applying identity-based policies, URL filtering, malware inspection, bandwidth controls, and traffic-management rules. The gateways were also associated with encrypted-traffic management and monitoring capabilities.

• Blue Coat WebFilterWeb filtering

  A web-filtering and URL-categorization capability used with Blue Coat gateways to classify websites and enforce organizational policies. It supported controls over categories such as entertainment, gaming, streaming media, and potentially harmful or inappropriate content.

• Security GatewayNetwork security appliance2001

  An appliance platform introduced during the company’s transition from caching to cybersecurity. Security Gateway products provided user authentication, internet-use policies, content filtering, virus scanning, and bandwidth restrictions for web and streaming applications.

• CacheFlowWeb caching and acceleration1998

  The original product family developed by CacheFlow for storing frequently accessed web objects near users. Products such as the CacheFlow 1000 and CacheFlow 500 were designed to reduce repeated downloads and improve web-delivery performance.

• PacketShaperWAN optimization and application management

  A product family obtained through the Packeteer acquisition. PacketShaper identified and managed application traffic, helping organizations prioritize, throttle, and optimize use of WAN bandwidth. Later capabilities included controls for consumer and multimedia applications.

• Spyware InterceptorAnti-spyware appliance2005

  An appliance introduced to help organizations detect and block spyware and related unwanted software at the network boundary.

• K9 Web ProtectionParental-control software2006

  A free consumer web-protection tool that monitored internet traffic, blocked selected website categories, and helped identify phishing or unsafe destinations. It extended Blue Coat’s filtering technology beyond enterprise deployments.

• Global Intelligence NetworkCloud security intelligence2015

  A cloud-based product family created by combining technologies from Blue Coat’s Solera Networks and Norman Shark acquisitions. It was intended to provide broader threat intelligence, malware analysis, and security visibility across network environments.

• 2015Alliance Ecosystem of Endpoint Detection and Response

  Global enterprise security

  Blue Coat launched an ecosystem intended to exchange information about security threats among technology vendors and organizations, supporting a more collaborative endpoint-detection-and-response model.

  Outcome. The program complemented Blue Coat’s partner strategy and broader move toward integrated security intelligence.

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• 2006K9 Web Protection launch

  Consumer

  Blue Coat offered K9 Web Protection as a free web-filtering and parental-control tool, extending its enterprise filtering capabilities to households.

  Outcome. The product broadened the company’s visibility outside enterprise technology, although it was later discontinued.

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• 2002Blue Coat security repositioning

  United States · International enterprise markets

  Following the collapse of the standalone caching market, the company repositioned its corporate identity and product strategy around internet security appliances. The campaign emphasized controlling, monitoring, and securing employee internet use.

  Outcome. The repositioning reduced the company’s dependence on caching and established the ProxySG and related security products as its central business.

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• 2016Acceptance of Symantec acquisitionM&A

  Blue Coat had filed plans for another IPO but was also pursuing strategic alternatives in the enterprise-security market.

  What changed. The company abandoned its IPO plans and agreed to be acquired by Symantec.

  Aftermath. The transaction closed on August 1, 2016, and Blue Coat’s products and technologies were integrated into Symantec’s enterprise-security organization.

  Reported acquisition value. $4.65 billion (2016)

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• 2015Launch of the Global Intelligence NetworkProduct launch

  Blue Coat had acquired technologies in network security, malware analysis, and security intelligence from Solera Networks and Norman Shark.

  What changed. It combined those capabilities into a cloud-based Global Intelligence Network product family.

  Aftermath. The move supported Blue Coat’s shift from individual appliances toward cloud-connected intelligence and analytics.

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• 2008Acquisition of PacketeerM&A

  Blue Coat sought to extend its security and web-management business into WAN optimization and application traffic control.

  What changed. It acquired Packeteer and added the PacketShaper product family and related network-performance capabilities.

  Aftermath. The acquisition expanded Blue Coat’s addressable market beyond web filtering into branch networking, application performance, and bandwidth management.

  Reported acquisition value. $268 million (2008)

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• 2002Shift from caching to enterprise securityStrategy

  The caching market developed more slowly than expected, competing vendors withdrew, and most of CacheFlow’s revenue increasingly came from security products.

  What changed. The company changed its name to Blue Coat Systems and concentrated product development and marketing on secure web gateways and internet-use controls.

  Aftermath. The strategy established Blue Coat as an enterprise-security vendor and made ProxySG more important than the original caching portfolio.

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• 2015Cancellation of Raphaël Rigo’s security conference talkControversy

  Blue Coat pressured security researcher Raphaël Rigo to cancel a presentation at SyScan 2015, citing concerns that the material could assist ongoing assessments of ProxySG. The action prompted criticism from security researchers who viewed public technical discussion as important for widely deployed security products.

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• 2013Export-control settlement over transfers to SyriaControversy

  The U.S. Bureau of Industry and Security announced a civil settlement with Computerlinks FZCO concerning alleged violations of U.S. export regulations related to transfers of Blue Coat products to Syria.

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• 2011Use of Blue Coat appliances in SyriaControversy

  Telecomix published data that it said came from Blue Coat web gateways operating in Syria and showing internet filtering and monitoring activity. Blue Coat acknowledged that its equipment was being used in Syria but said it had been sold through intermediaries for an Iraqi government customer. The company later announced that it would halt updates, support, and related services for systems operating in Syria.

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• 2016Blue Coat cancels planned IPO after agreeing to Symantec acquisition

  Blue Coat withdrew its proposed initial public offering and announced Symantec’s agreement to acquire it for approximately $4.65 billion.

  M&ALeadership change
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• 2016Symantec completes acquisition of Blue Coat

  The acquisition closed on August 1, 2016, after which Blue Coat’s products were integrated into Symantec’s enterprise-security portfolio.

  M&AProduct generation
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• 2015Bain Capital acquires Blue Coat from Thoma Bravo

  Bain Capital acquired Blue Coat in a reported transaction valued at approximately $2.4 billion, with a possible public offering subsequently considered.

  M&A
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• 2015Blue Coat announces the Global Intelligence Network

  Blue Coat combined technologies associated with its Norman Shark and Solera Networks acquisitions into a cloud-based security-intelligence product family.

  Product launch
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• 2011Greg Clark becomes CEO

  Borman was removed from the chief executive role and Greg Clark was appointed as his successor.

  Leadership change
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• 2011Thoma Cressey Bravo acquires Blue Coat

  The private-equity firm acquired Blue Coat in a transaction reported at approximately $1.3 billion.

  M&A
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• 2010Michael J. Borman appointed president and CEO

  Michael J. Borman succeeded Brian NeSmith as Blue Coat’s president and chief executive officer.

  Leadership change
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• 2009Blue Coat restructures and eliminates approximately 280 positions

  The company announced a restructuring that included layoffs affecting about 280 of its roughly 1,500 employees and the closure of facilities in Latvia, New Jersey, and the Netherlands.

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1. Blue Coat Systems