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Computerworld - Aruba Networks Inc. announced today that it will buy a start-up in outdoor mesh wireless technology, Azalea Networks Inc., in a cash and stock deal valued at $40.5 million.
Adding Azalea's technology will allow Aruba to provide wireless LAN networks to businesses that stretch from inside corporate offices to the farthest oil rigs or other industrial operation, said Mike Tennefoss, Aruba's head of strategic marketing.
Azalea makes wireless access points that sell at the high end for $2,000 apiece and serve large industrial operations, including mining, oil exploration and shipping. Based in Milpitas, Calif., Azalea has 108 workers, with 98 based in Beijing, Tennefoss said. The employees will be retained once the deal closes in August or September, and the products will be re-branded with the Aruba name, he added. Aruba has 600 employees and is headquartered in Sunnyvale, Calif.
Azalea has shipped 25,000 mesh APs to 140 customers, and installed 600 mesh APs for voice, video and Wi-Fi access over 19 square miles in Beijing for the 2008 Olympic Games. It had $5 million in revenues in 2009. Azalea and Aruba both operate Wi-Fi in the 2.4 GHz and 5 GHz spectrum, which is used in mesh wireless networks. Mesh technology from Azalea passes data point to point wirelessly, unlike other network topologies using Wi-Fi that has wires connected to APs. To keep video and voice data streams constant and with little jitter, Azalea APs find the shortest route by communicating with nearby APs, rather than taking a longer route to a gateway switch as with some competing approaches, Tennefoss said. Azalea also minimizes delay by reducing the re-sending of packets. Aruba said Azalea technology will be far cheaper than technology from competitors, such as Cisco Systems Inc. BelAir Networks Inc., Firetide Inc., MotoMesh (a product of Motorola Inc.) and Tropos Networks Inc.
Azalea will require about 12 APs per square mile at $2,000 apiece, while the lowest-price alternative from Tropos requires 10 APs at about $3,200 apiece, Tennefoss said. Technology from Cisco, which is the global leader in wireless LAN gear sales, would cost about $153,000 per square mile, compared to $24,000 a square mile from Azalea, he said.
"The cost difference is profound," Tennefoss said. While some customers like using Cisco because it has a wide array of network gear, not just in wireless, they pay a premium for the products, he added.
Paul DeBeasi, a Gartner analyst, said that Cisco doesn't have a product exactly like Azalea's, which should help Aruba competitively. The market for industrial wireless isn't big, compared with the market health care and education, but added, "it will likely grow as municipalities and enterprises use wireless to improve industrial control, monitoring and security."
Infonetics puts the global market at about $200 million today.
Tennefoss noted that Aruba is growing in market share as the number two enterprise wireless LAN vendor, while Cisco is slipping.
IDC recently said that Aruba grew by 13% in revenues in 2009 to $148 million, giving it nearly a 9% share of the global market, second to Cisco. Cisco, meanwhile, shrunk by 10% in revenue in 2009, reaching $953 million for a 56% share.
Originally published on www.computerworld.com. Click here to read the original story.