WLAN switch execs come to dinner

At last year’s Network World dinner with top executives from some of the leading wireless LAN switch start-ups, the talk focused on access points, chipsets and radio frequency beams. This year, the conversation centered on partnerships, the channel, horizontal markets and, of course, an 800-pound gorilla called Cisco.

LAS VEGAS – At last year’s Network World dinner with top executives from some of the leading wireless LAN switch start-ups, the talk focused on access points, chipsets and radio frequency beams. This year, the conversation centered on partnerships, the channel, horizontal markets and, of course, an 800-pound gorilla called Cisco.

Yes, the WLAN switch market has grown up over the past year. From the vendors’ perspective, technology concerns, such as standards and security, have been largely addressed. Products are shipping. Now the task is building a sales infrastructure that can win business in this highly competitive market.

Toward that end, two of the vendors from last year’s NetWorld+Interop dinner – Aruba Wireless Networks and Trapeze Networks – recently brought on sales-savvy industry veterans as CEOs. The new faces in our private dining room at Canaletto’s in the Venetian Hotel were Aruba’s Don LeBeau (formerly of Data General, IBM and Cisco) and Trapeze’s Jim Vogt (formerly of Bay Networks, Nortel and Ingrian).

Airespace CEO Brett Galloway returned for a second year, as did AirFlow Networks CEO Bob Machlin. But AirFlow recently dropped out of the WLAN switch derby and is now a component vendor, selling its VoIP-centric “switch on a chip” technology to other systems vendors. “In the last year a lot of things were sorted out,” Machlin said. “One of the things we discovered was that our value-add was really embedded in core technology.”

In a second-floor room overlooking a Vegas version of Venice’s St. Mark’s Square, the vendors were upbeat about the way the market is responding to their products and passionate about the idea that WLANs will revolutionize corporate networks. And despite the fact that they compete for customers, they never sniped at each other – they saved that for Cisco.

After ordering wine and chatting for a bit, we closed the windows to muffle the singing of the gondoliers and got down to business. Here are highlights of the wide-ranging conversation.

None of the privately held companies would talk about revenue numbers, but they all maintained that the market has grown significantly. “A lot of people were evaluating technology last year, and this year they’re actually buying,” Vogt said. “The pace is definitely picking up in terms of companies spending real money.”

Galloway identified two major trends that occurred over the past year. First, customers began moving from pilot projects to enterprise-wide deployments; and second, the market moved from narrow verticals such as education, medical and retail, to a broad horizontal market.

He said the vertical markets were a good proving ground for wireless technology. The vendors identified and addressed weaknesses such as scalability and management feature. Today, technology is less of a focus for these CEOs.

LeBeau said his top priorities are building “a distribution model that is an extension of our service and support model” and putting together a business infrastructure that can scale.

Vogt said partnerships are at the top of his list.

Speculation has been rampant that Cisco and other wired switch vendors would gobble up some of these start-ups. They all refused to bite, however, when asked if Cisco had approached them. They did point out that the universe of possible suitors goes far beyond the usual suspects.

“There’s a tremendous opportunity for partnerships and not just with data and voice infrastructure vendors,” Vogt said. “The endpoint is personalized services, being able to deploy services to a person vs. assigning network attributes to a port. It’s much more intense when you have mobility mixed into the equation, where you identify a user and assign a policy and services, and those policies and services travel with users as they traverse the network. If you view it that way, it’s not about wireless, it’s about mobility, and there are huge opportunities on multiple levels in terms of partnerships.”

As the dinner progressed from insalata to pasta, the conversation inevitably turned to the meat of the issue: Cisco. All of the vendors acknowledged that Cisco is the market leader, with somewhere about a 60% share. But they maintained that when it comes to wireless, Cisco just doesn’t get it.

The CEOs scoffed at Cisco’s most recent announcement, an $18,000 WLAN Services Module that fits into the Catalyst 6500 switch. The announcement is part of Cisco’s Structured Wireless Aware Network (SWAN) architecture, which is based on the idea that customers should add wireless features to their existing wired switch network.

“I don’t think they have yet figured out what problem they need to solve, despite the announcement of their SWAN architecture and the point product announced today,” Machlin said.

Vogt added that for the amount of money a Cisco customer would pay for one module, his customers could buy enough access points and WLAN switches to set up a whole wireless network.

“The major difference between the incumbent vendors and this group is that we fundamentally believe 802.11 requires a purpose-built infrastructure to optimize things people are trying to do, as opposed to just trying to say it’s a feature on the wired network,” LeBeau said. He said the incumbents such as Cisco, Foundry Networks and Extreme Networks understandably are trying to protect their flanks from the wireless onslaught, but the momentum is on the side of the pure play wireless vendors.

So, why does Cisco still dominate the market?

LeBeau put it this way: “Customers who are uninitiated make the decision to go with the incumbent vendor because it’s safe and comfortable. The reality is that the customer who becomes initiated soon learns there’s a better way to do it and that’s the target market for us.”

It’s not about getting customers to replace their Cisco gear, Machlin said, because customers still will be Cisco shops and a good percentage probably still will have some Cisco access points in their networks. It’s about winning over customers when they move from pilot to full-blown deployment.

That’s where the start-ups, with their thin access points and smart switches, think they have a major advantage over Cisco’s fat access point model. “It’s decentralized vs. centralized,” LeBeau said. With the Cisco model, the logic and processing power is at the edge of the network, so if a customer needs to make a change to their security settings to combat a new threat, the customer has to touch every access point. “It’s a very disruptive approach. It’s labor-intensive, and it’s very insecure,” he said.

Voice technology has generated quite a bit of buzz lately, and the vendors agreed that there’s a synergy between VoIP and WLAN technologies. “VoIP over wireless LAN is a significant driver for VoIP in general,” Galloway said.

As the waiter brought a round of espressos, the conversation turned to the long-range trend toward mobility.

“In addition to economics driving the transition from wired to wireless, there’s a more fundamental drive, which is that personal communications wants to be untethered,” Galloway said. “You see this in the transition from wired phones to cell phones, in the home from wired phones to cordless phones, in the rise of PDAs and laptops.”

LeBeau summed it up this way: “Wireless will be the primary connection. And you can economically prove that to be the case. Today we have technology that is going through an evaluation, and it will become as predictable and reliable as the blue cable. It’s inevitable that it will. And when it does, the economics will drive the entire edge of networks to be wireless. When that happens, the way you build networks will entirely change.”

As we left the restaurant, the CEOs expressed confidence that their start-ups would be around a year from now and said they looked forward to another dinner of fine food, wine and conversation. Noting that it took each of them at least 20 minutes to locate the restaurant amid the hotel’s maze-like corridors of malls and canals, we agreed to reconvene at an easier-to-find location.