HP acquires Aruba Networks

Two gentlemen pushing puzzle pieces together

HP (NYSE: HPQ) has confirmed today it is to acquire wireless LAN vendor Aruba Networks (NASDAQ: ARUN) for $3bn.

In a statement HP says that together the two vendors will deliver next-generation converged campus solutions, leveraging the Aruba brand.

“By combining Aruba’s world-class wireless mobility solutions with HP’s leading switching portfolio, HP will offer the simplest, most secure networking solutions to help enterprises easily deploy next-generation mobile networks,” comments Meg Whitman, HP’s chairman, president and CEO.

Sunnyvale-based Aruba posted revenues of $729m in 2014, and has reported compound annual revenue growth of 30 percent over the last five years.

The purchase of Aruba gives HP a stronger footing in next generation wireless technology - such as the 802.11ac Wi-Fi standard - by adding Aruba’s mobility hardware and software to HP’s switching portfolio.

The new organisation will be led by Aruba’s CEO Dominic Orr, and chief strategy and technology officer, Keerti Melkote, reporting to Antonio Neri, leader of HP’s Enterprise Group.

“Together with HP, we have a tremendous opportunity to become an even greater force in enterprise mobility and networking,” says Orr. “Together, we will build on Aruba’s proven ‘customer first, customer last’ culture, creating an innovative, agile networking leader ideally positioned to solve our customers' most pressing mobility, security and networking challenges.”

HP and Aruba say that by combining their product portfolios and go-to-market approaches they will be able to strengthen the financial performance of the combined HP networking business, and create a leading competitor in the $18bn and growing campus networking sector. Overall, HP expects the acquisition to be accretive to earnings in the first full year following close.

The transaction is expected to close in the second half of HP’s fiscal year 2015, subject to Aruba stockholder approval, regulatory approvals in the US and other countries and other customary closing conditions.

Channel Pro comment

Two years ago Cisco was losing wireless market share, to the point that even some partners were turning to other vendors’ wireless kit to integrate it within end-to-end Cisco deals. But developing wireless architectures is costly and time consuming, so Cisco acquired Meraki for $1.2bn for an overnight refresh of its networking portfolio. Since then Cisco has managed to stop its wireless market-share decline.

It appears HP is following Cisco’s lead; the Aruba family of wireless products is highly regarded and most HP partners will be familiar with it. It will strengthen HP’s position in a growing market – and stop its own channel having to turn to third party kit, especially in big deals.


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