Cisco Rival Aruba Networks Acquires Outdoor Mesh Network Supplier Azalea

Networking vendor Aruba Networks is expanding its enterprise networking technology portfolio beyond indoor applications with the acquisition of Azalea Networks, a supplier of outdoor mesh networks. Cisco rival Aruba says that Azalea's offering targets outdoor industrial verticals such as oil and gas, logistics, manufacturing, and transportation, providing the capacity for applications such as video surveillance.

Distributed enterprise networking technology vendor Aruba Networks (NASDAQ: ARUN) will acquire Azalea Networks, a supplier of outdoor mesh networks. The stock deal is worth about $27 million, plus up to an additional $13.5 million in cash over two years.

Azalea offers mesh products for outdoor industrial applications in the oil and gas, logistics, manufacturing, mining, petrochemical, public safety, smart grid, and transportation sectors.

Aruba says the addition of these products will enable it to deliver secure mobility solutions for enterprises that span from office to outdoor industrial.

"This acquisition brings our customers and prospects innovative new solutions for real-time outdoor applications like video surveillance," said Hitesh Sheth, Aruba’s chief operating officer, in a statement.  

"Enterprises need a secure, reliable link between their assets and the people who use them, wherever they work or roam. Outdoor networks need to cope with a wide range of environmental factors, and this challenge is compounded when video and voice need to be sent over long distances in real time. Azalea has made outdoor mesh work in industrial enterprise applications that cut across a wide range of verticals."

Aruba’s acquisition of Azalea will include an operations center in Beijing, staffed by world-class engineers, which will complement Aruba’s existing R&D centers in Bangalore and Silicon Valley.   

The deal is designed to capture a growing market as more enterprises are looking to deliver video across both indoor and outdoor settings.

"Enterprises have primarily focused WLAN deployments on indoor spaces, but outdoor applications loom large," said Matthias Machowinski, directing analyst for Enterprise Voice and Data at Infonetics Research. "The economic recovery, the need for ubiquitous connectivity, and emerging applications like smart grid and video surveillance are going to accelerate outdoor wireless infrastructure deployments by enterprises in the coming years. Azalea’s mesh technology will enable Aruba to provide an integrated, enterprisewide wireless infrastructure that addresses both indoor and outdoor applications."

The acquisition is expected to close in the first quarter of Aruba’s 2011 fiscal year, subject to standard closing conditions, and to be neutral or accretive to results over the next 12 months. Azalea had 2009 revenues of approximately $5 million, and a total customer base of over 140 companies.