Wi-fi wars: Battlelines for the branch office

The wireless clock is ticking. Paul Sadler knows it. The red-hot wi-fi business in the branch office is his to lose.

Sadler has a quarter – maybe two – to churn Aruba resellers to wi-fi vendor Aerohive Networks, distributed in Australia through DNA Connect. In May, HP completed its US$3 billion (A$4 billion) acquisition of upstart wi-fi vendor Aruba, rolling it into HP’s new networking group, HPN.

“For us, the clock is ticking, absolutely,” says Sadler, DNA Connect marketing manager. “Some partners decided that regardless of [Aruba’s] roadmap, they don’t want to be a HP partner. We’re talking and making good progress. Then there’s those [who] want to see what the [HP-Aruba] products will be. That will be the bulk of partners and that’s dependent on when and how HP communicates.”

Sadler says there is a strong correlation between partners who resell Aruba and those who work with Juniper Networks. In fact, Aruba and Juniper struck a strategic alliance in June 2014, which has since been overshadowed by the HP acquisition, and seemingly replaced by a deal between Juniper and Ruckus Wireless. Sadler says Juniper partners are receptive because they aren’t happy about “being forced to be a HP partner” or don’t want to jeopardise their Juniper relationship.

The HP deal gives Aerohive “a seat at the table to explain what you offer”, says Sadler, which includes a 25 percent discount to Aruba partners until 31 December. Aerohive is differentiated because it doesn’t need controllers and is cloud-managed, which makes it ideal for managed service providers, he says.

“We’re looking to capitalise on the disruption going on. We’re laying out the product roadmap to give potential Aerohive partners confidence there’s a strategy and help partners who are transitioning to MSPs or allow existing MSPs add a service stream, which is wi-fi-as-a-service.”

Changing relationships

Juniper wasn’t the only Aruba partnership possibly affected by the HP buyout. The wireless vendor also had technology agreements with HP competitors including Brocade, Alcatel and Dell that are unlikely to continue.

Gartner analyst Tim Zimmerman wrote favourably of HP’s Aruba acquisition but noted the prospect of channel conflict especially with Brocade, Juniper and Dell, “by placing them in the uncomfortable position of partnering with their direct competitor”.

“We expect these vendors to seek out new WLAN partnerships within the next two years, potentially involving Aerohive, Xirrus or Ruckus,” said Zimmerman.

He also advised Aruba customers to hang tight because “we do not anticipate that HP will make fundamental changes to the Aruba product”.

But Aruba partners that are with Dell, Brocade or Juniper should “consider moving your [wireless network] supply to HP or re-evaluating your vendor”.

The rash of wi-fi vendor acquisitions has been driven by opportunities in managed services and the need for streamlined remote management of the branch office, says Gartner analyst Bjarne Munch. Kicking off in December 2012, Cisco completed its US$1.2 billion takeover of wi-fi and managed networks vendor Meraki. Last July, security maker Fortinet closed its US$44 million acquisition of Meru Networks.

“It’s the management aspect that’s compelling,” says Munch. “There’s growth in wi-fi but it’s under the umbrella of managed network services… incorporating switches, [network] optimisation and wi-fi. Meraki is trying to simplify branch offices [that] have become very complex with lots of devices [that are] difficult to install and operate, and are costly.”

The opportunity to streamline the branch office coalesces with a change to mobile working, cloud services and faster 802.11ac and .ax wireless protocols that support multi gigabit-a-second speeds.

“We’re looking at a setup where you’re going to replace every network device in the branch office with a single device [and remove branch routers],” says Munch. “The likes of Cisco should be a little bit worried about their router business,” he adds.

Munch says the arrival of the software-defined network accelerates the need to fix the knot of networking and point solutions in the typical branch office. “Getting rid of functions that were sitting in different appliances, put in a simple device that you plug and play in the branch office, is autoconfig and have everything sitting in a cloud server.”

Munch says IBM could be a surprise re-entrant to networking. Big Blue sold its networking division to Cisco in 1999 and was recently rumoured to be shopping its software-defined networking division to Juniper, Dell, Cisco, Fujitsu and HP for US$1 billion. Whether it was serious or a thought bubble, it kept its SDN arm that could be a major player in a US$35 billion-a-year industry by 2020.

Munch believes IBM is “slowly getting the tools, if they want to get back into” providing networking products and services as part of their systems integration offer. Telcos such as Telstra and BT are also placed to capitalise, he adds.

That will also bring vendors such as Riverbed, Silver Peak, CloudGenix and Viptela into the acquisition frame, he says. “There will be these low-cost, easy solutions and, if channel partners don’t realise it, then the customers will do it [for themselves].”

Next: Behind HP's Aruba plans

HP tasked Aruba Networks A/NZ managing director Steve Coad to communicate the pair’s channel strategy. HP declined to comment for this article.

Coad is speaking to partners and customers and starting to bond HP and Aruba teams. And while “90 percent of Aruba partners are HP partners”, the relationship was shallow with little significant interaction, Coad says. The crossover should be much juicier than the Juniper partnership.

“When the Juniper-Aruba alliance was announced, we got together and said, Who are your resellers? Some of our larger, regional resellers were also large Juniper resellers… maybe because they didn’t want to be Cisco resellers. [But] Juniper didn’t have a huge number of resellers like HP did, [which] has hundreds of resellers. With Juniper, we only recruited four or five.”

Coad says after comparing resellers with HP, a “significant number” aren’t Aruba partners. “We’ve gone through a cleansing exercise and so far 40 HP partners have agreed to start the process to become Aruba partners.”

And while it’s inevitable that Aruba resellers will be exposed to HP’s portfolio, Coad says HP isn’t seeking converts. “None of the Aruba resellers are being converted to HP switching resellers other than the ones who already are. Big system integrators like Optus, DiData, NTT and UXC – they already sell Juniper, HP and Cisco.”

Coad agrees the reason why HP bought Aruba was for its technology. Aruba enables mobile workers and guest logins, especially through its ClearPass access management system. It was used at the Australian Open tennis and by KFC, James Cook University and Epworth Healthcare to enforce policies on networks, devices and applications.

He foreshadows a barney with Cisco once the HP and Aruba teams align in the first half of next year. “We also have a very competent, strong team whether its R&D and engineering and sales, pre-sales, or tech support that takes the fight to the major competitor. We can go hammer and tongs and beat Cisco.”

Aruba also offers stronger margins per port than traditional wired switches, Coad claims. Plus it now has “credibility” to go after Global 2000 companies with gusto.

Coad agrees with Gartner’s Munch that managed services provision is a core benefit of Aruba’s technology. “The strong management platform is very good for managing customers away to Aruba.”

He adds: “It’s a value-based wireless sale. There will be a lot of end users upgrading over the next four to five years [because] their wireless networks are coming to an end. They haven’t gone [802.11ac] yet; there will be a lot of transitions and upgrades. The use of wireless is changing.”

That includes more platform intelligence such as location services, data analytics and value-adds for retail, education, healthcare and public access. “The resellers don’t just want to sell the plumbing layer; they want to sell the management layers and services on top.”

Disties and prices

Unlike elsewhere, there’s no crossover between HP and Aruba distributors in Australia. “HP has five disties and Aruba has three and none of them are the same,” says Coad.

HP and Aruba will operate separate channel programs for the next six months. Coad says the respective programs are similar but have quirks, for instance HP’s prices are in Aussie dollars while Aruba’s are in greenbacks; converting to HP’s price list should hedge our dollar as it falls.

“It’s the back-end, clunky stuff that needs to go one way or another. HP has a healthy rebate program and we don’t, so that’s something that we’ll leverage,” Coad says.

“We want to recruit the resellers; we’re 100 percent indirect and want to maintain that. We really want to take on Cisco in the enterprise and down to SMB so we need skilled and credible partners and geographic reach.”

The Fortinet and Meru marriage

In July, Fortinet closed its acquisition of Meru Networks. At $44 million, it was smaller in scale than purchases by Cisco and HP, but again shows how networking vendors are consolidating to grab opportunities.

Jon McGettigan, Fortinet’s Australia & New Zealand regional director, says managed services are a “key focus” for the security vendor. Although Fortinet had its own controller-managed wi-fi access point (FortiAP), Meru opens markets and technology to be integrated into a unified stack for the enterprise, he says.

It adds 14,000 customers and Australian distributors Ingram Micro and Wavelink. “That gives us the opportunity to cross-sell to those [customers] who don’t have Fortinet as well,” McGettigan says. Among Fortinet’s 200,000 global users are the University of Ballarat, Brewers Association of Australia and New Zealand, and Apparel Group, parent of Sportscraft and Jag.

Fortinet badges will replace Meru’s by March. “An advantage of Meru is the large developer and engineering base. That’s a huge injection into our Fortinet wireless [products],” says McGettigan.

Meru has 300 global staff and four locally who will merge with Fortinet’s 60 ANZ staff.

McGettigan says Fortinet’s channel story is, “an investment in Meru, a larger customer base that we can have a great cross-sale conversation and the new talent opens up technology they’re not using currently”.

“Mobility is driving the requirement for wireless to be more prevalent, so [networking vendors] are taking the easier route to acquire a business rather than take four to five years [to grow it organically].”

Next: partners weigh in

ICT Networks and UXC Connect

As ICT Networks chief executive, Rob Kingma oversees a solutions provider that has relationships with Juniper, Aruba and Chinese networking vendor Huawei – all historically competing with HP.

“There’s questions about how that [HP-Aruba acquisition] will roll through; how independent will Aruba remain?” Kingma says. “Their channel programs and introduction of HP product behind it; it brings up questions that we have to keep an eye on.”

Although HP is silent on its plans, Kingma says, “Aruba has been very forward in communicating with the channel.”

But he looks for vendors to define a vision: “[No] vendor has nailed the product set, especially [802.11ac]. Over the next three to five years, enterprises won’t be rolling copper out to desks. Their LAN will be wireless. And while there’s a great set of features in Aruba and Meraki and native HP, there’s not necessarily a perfect answer as yet.”

He reckons Aruba is a Trojan horse: “[HP] will use Aruba to introduce other products into that customer base.”

Meantime, other vendors are kickstarting conversations. Huawei and Juniper were very forward with ICT Networks and it “had some discussions with Aerohive”, he says.

Kingma predicts a flurry of M&A activity among networking vendors, especially security-centric providers like Palo Alto and F5 Networks, with which he partners. “In the last 12-18 months, they went from very few partners to partnering with everyone.”

UXC Connect also has a longstanding Aruba relationship, says chief executive Ian Poole. He says Aruba technology is “very strong” and HP’s acquisition is a “smart move”.

“Enterprise mobility is a very high-growth market,” Poole says. “Picking up Aruba will enable HP to have a very strong mobility position, add a strong partner model and integrate mobility into their own offerings.”

UXC partners include Airwatch, Alcatel-Lucent, Aruba, Cisco and Riverbed but Poole says its ‘customer-first’ policy means it partners with the best vendor. So he sees little channel conflict despite being a Cisco partner. “We’ve done work with HP [but] compared to Aruba, not as much. Most of our networking is with Cisco.”

Poole says HP’s network management software will give Aruba a leg up. “The service levels you now need to meet when managing client networks are tighter and no longer technical service levels; they’re business service levels. Now you need a far better knowledge of what’s on the network. With more cloud traffic, [the network] has to be smarter and that’s where SDN [software-defined networks] comes in. You need a strong and intimate knowledge of what your customers are doing.”

Alliance and acquisitions: wi-fi history

1939 Hewlett-Packard (HP) founded by Bill Hewlett and David Packard in Packard’s Palo Alto garage.

1984 Cisco Systems founded by Leonard Bosack and Sally Lerner. Grows to 70,000 employees in 2015

2000 Fortinet founded by Michael and Ken Xie to compete in the unified threat gateway segment

2002 Meru Networks founded by Vaduvur Bharghaban, Srinath Sarang. Joseph Epstein and Sung-Wook Han

Keerti Melkote and Panjak Manglik found Aruba Networks

2006 Meraki founded by Sanjit Biswas, John Bicket and Hans Robertson

2012 Cisco completes US$1.2b buy-out of Meraki that joins Cisco’s Cloud Networking Group

2014 June Juniper and Aruba announce collaboration

2015 February Meraki founders quit Cisco

May19 HP completes buy of Aruba for US$3b

May 27 Fortinet announces intention to buy Meru Networks