Cisco Rival Aruba Networks Acquires Outdoor Mesh Network Supplier Azalea

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.

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