Cloudflare Enters Multicloud Networking Market: Unlocks Simple, Secure Multicloud for Businesses
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The introduction of Cloudflare's Magic Cloud Networking, powered by Nefeli Networks' technology, represents a strategic move into the multicloud networking (MCN) market. This is particularly significant given the increasing reliance of businesses on public cloud services and the growing trend towards multicloud strategies. The acquisition and subsequent product launch could potentially open new revenue streams for Cloudflare and enhance its competitive positioning against other connectivity and security service providers.
From a market perspective, the demand for simplified cloud network orchestration tools is on the rise as companies seek to manage their cloud infrastructure more efficiently. Cloudflare's decision to integrate MCN capabilities into its existing SASE platform, Cloudflare One, augments its Zero Trust product portfolio. This integration could streamline operations for customers by providing a unified management experience across cloud and on-premises deployments, which may lead to increased customer retention and attract new clients looking for comprehensive solutions.
Furthermore, by positioning itself as a one-stop-shop for network transformation, Cloudflare can leverage cross-selling opportunities among its existing customer base and potentially command higher margins. The global reach of Cloudflare's network, coupled with the added functionality of Magic Cloud Networking, could also enhance its value proposition in the SASE market, which is rapidly evolving and highly competitive.
Cloudflare's acquisition of Nefeli Networks and the launch of Magic Cloud Networking could have a material impact on the company's financials. The move may lead to an increase in capital expenditures in the short term due to integration and development costs. However, it also has the potential for revenue growth in the mid to long term as Cloudflare taps into the multicloud networking market.
Investors should monitor the adoption rate of Magic Cloud Networking among Cloudflare's customer base, as it will be an important indicator of the product's success and its contribution to the company's top-line growth. Additionally, given that Cloudflare is now offering a more comprehensive product suite, there may be opportunities for pricing power improvements and higher average revenue per user (ARPU).
It's essential to evaluate Cloudflare's ability to execute on this strategy and to consider the competitive responses from other players in the space. The efficiency of the integration process and the effectiveness of the new product in meeting customer needs will be critical factors in determining the financial impact of this strategic initiative on Cloudflare's performance.
With the launch of Magic Cloud Networking, Cloudflare is addressing key cybersecurity challenges faced by businesses operating in multicloud environments. The product's emphasis on simplifying the management of cloud networking and enhancing security protocols is timely, as enterprises increasingly seek to protect their data and applications from evolving threats.
The integration of Nefeli's technology within Cloudflare's existing security framework could potentially offer stronger protection against security breaches, as it allows for a more cohesive security policy across various cloud platforms. This approach aligns with the Zero Trust security model, which advocates for continuous verification of trust within a network, regardless of whether traffic originates from inside or outside the network's perimeter.
For businesses, the ability to visualize and manage their cloud infrastructure with integrated security features at scale could reduce the risk of misconfigurations and security gaps, which are common challenges in multicloud setups. Cloudflare's global network infrastructure may also provide an added layer of resilience against distributed denial-of-service (DDoS) attacks and other cyber threats, further solidifying its position in the cybersecurity landscape.
Introduces new product – Magic Cloud Networking – fueled by recent acquisition of Nefeli’s multicloud connectivity technology
Today, the majority of businesses rely on large public cloud providers in some way, and these organizations need to manually configure and manage cloud networking platforms to connect each virtual private cloud (VPC). Multicloud networking offers the potential for businesses to use multiple cloud environments and easily deploy and manage connectivity and security policy across them. Nefeli’s technology automates and simplifies this process by creating a single pane of glass that allows teams to more easily deploy and manage changes to networking components.
“We believe the full potential of the cloud will only truly be unlocked when customers can easily mix and match the best features of each public cloud provider,” said Matthew Prince, CEO and co-founder at Cloudflare. “Adding Nefeli’s team and capabilities to Cloudflare’s connectivity cloud fast tracks our entrance into multicloud networking – enabling our customers to reduce the cost of managing multiple cloud providers as well as gain greater control, visibility, agility, and resiliency to get the most out of their cloud environments.”
Nefeli's partnership with Cloudflare began during the Workers Launchpad program, allowing the Nefeli team to explore ways the technologies could scale to best serve customers. Cloudflare acquired Nefeli’s team and technology to accelerate the development and launch of Magic Cloud Networking. Cloudflare is integrating this technology into Cloudflare One, its comprehensive SASE platform, to provide customers with a unified management experience across their entire enterprise network, including cloud and on-premises deployments. By offering Magic Cloud Networking as part of a unified platform alongside Secure Access Service Edge (SASE) and Web Application and API Protection (WAAP) capabilities, Cloudflare is the only vendor today with a comprehensive Zero Trust product portfolio, robust network connectivity powered by our global footprint and backbone, and industry-leading application and network security – connecting and protecting not only customers’ internal, private systems but also their external, public-facing systems.
Magic Cloud Networking will allow customers to leverage Cloudflare's global network, the largest and most interconnected network in the SASE market, spanning over 310 cities in over 120 countries and interconnecting with over 13,000 networks globally. With the addition of Magic Cloud Networking, Cloudflare will enable customers to seamlessly discover, visualize, connect, and secure their cloud networking infrastructure – uniquely positioning Cloudflare as the one-stop-shop for customers looking to transform their network architecture.
“At Nefeli, we worked to ensure businesses could get the most out of the cloud, without being constrained by artificial boundaries within or between any particular cloud platform," said Eugenia Corrales, CEO of Nefeli. “By seamlessly integrating Nefeli’s multicloud networking capabilities into Cloudflare’s robust platform, businesses will be now able to easily connect and manage their cloud infrastructure with security and performance built in at scale."
“Since the early days of the Internet, complexity has been one of the biggest roadblocks to innovation,” said Dr. Scott Shenker, Co-founder and Chairman of Nefeli. “That’s why I’m thrilled to see this next chapter for Nefeli’s talented team – bringing simplicity and scalability together to revolutionize multicloud networking.”
To learn more, please check out the resources below:
- Blog: Cloudflare secures and connects public cloud environments for enterprise
- Cloudflare Magic Cloud Networking
About Cloudflare
Cloudflare, Inc. (NYSE: NET) is the leading connectivity cloud company. It empowers organizations to make their employees, applications and networks faster and more secure everywhere, while reducing complexity and cost. Cloudflare’s connectivity cloud delivers the most full-featured, unified platform of cloud-native products and developer tools, so any organization can gain the control they need to work, develop, and accelerate their business.
Powered by one of the world’s largest and most interconnected networks, Cloudflare blocks billions of threats online for its customers every day. It is trusted by millions of organizations – from the largest brands to entrepreneurs and small businesses to nonprofits, humanitarian groups, and governments across the globe.
Learn more about Cloudflare’s connectivity cloud at cloudflare.com/connectivity-cloud. Learn more about the latest Internet trends and insights at https://radar.cloudflare.com.
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Forward-Looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which statements involve substantial risks and uncertainties. In some cases, you can identify forward-looking statements because they contain words such as “may,” “will,” “should,” “expect,” “explore,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “contemplate,” “believe,” “estimate,” “predict,” “potential,” or “continue,” or the negative of these words, or other similar terms or expressions that concern Cloudflare’s expectations, strategy, plans, or intentions. However, not all forward-looking statements contain these identifying words. Forward-looking statements expressed or implied in this press release include, but are not limited to, statements regarding the capabilities and effectiveness of Magic Cloud Network, Cloudflare One and Cloudflare’s other products and technology, the benefits to Cloudflare’s customers from using Magic Cloud Network, Cloudflare One and Cloudflare’s other products and technology, the timing of when or any of its related features will be generally available to all current and potential Cloudflare customers, Cloudflare’s technological development, future operations, growth, initiatives, or strategies, and comments made by Cloudflare CEO Matthew Prince and others. Actual results could differ materially from those stated or implied in forward-looking statements due to a number of factors, including but not limited to, risks detailed in Cloudflare’s filings with the Securities and Exchange Commission (SEC), including Cloudflare’s Annual Report on Form 10-K filed on February 21, 2024, as well as other filings that Cloudflare may make from time to time with the SEC.
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Cloudflare, Inc.
Daniella Vallurupalli
Vice President, Head of Global Communications
press@cloudflare.com
Source: Cloudflare, Inc.
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