The Great WLAN Vendor Consolidation of 2015?

The Great WLAN Vendor Consolidation of 2015?

So.

One of the things I have been thinking about recently is the state of many Enterprise WLAN Vendors in the marketplace.

Before I go any further I should  state that any of the opinions I express here are purely my own and I am not speaking for anyone else apart from sharing my own personal musings on the topic. So don’t take this too seriously.

Way back in 2008 when I worked for a South African ISP and got into the WLAN game I remember bumping into a veritable plethora of WLAN vendors.  The ones I met with and evaluated included:

  • Cisco – “Yeah so we bought this company called Aironet, all their base is belong to us”
  • Aruba – “This place is so unsafe, clothe me in the warm embrace of your firewall and VPN”
  • Trapeze – “But Have I shown you the RINGMASTER!?”
  • Colubris – “Have we mentioned our TRI-plane architecture yet? Oh? We have? Have you heard of our tri-PLANE…”
  • Meru – “Thou shalt worship only ONE channel!”
  • Motorola – “We are the Motorola corporation”
  • Xirrus – “Check this out, It’s the next big thing! GIANT ARRAYS!”
  • Hewlett Packard – “Listen sonny, we were founded in the great depression…”

There were others that i did not work with including:

  • 3Com – “We just sold to HP”
  • Alcatel Lucent (using Aruba) – “We’re older than Hewlett Packard”
  • Enterasys  – “What looks better on me? Bluesocket or Trapeze? Or maybe Siemens Hi-Path?”
  • Ubiquiti – “We shall call it the NANOSTATION!”
  • Wavion – “Yes, I promise you only need ONE AP”, “For the whole City?”, “… Sure… just pay cash up front…”
  • Belair Networks – “It’s all about that MESH, YO!”

And then there were the babes in the wood, so to speak:

  • Ruckus Wireless  – 4 years old, and treating the WLAN market like a chew toy.
  • Aerohive  – 2 years old and being disruptive and anarchic with no Control(ler).
  • Meraki  – 2 years old and raving about rooftop parties and openly meshed relationships… or something like that.

I am going to ignore Netgear, D-Link, Fortigate, Cyberoam and any “We build wired network infrastructure and here is a radio you can plug into it” type vendors. I say this simply because I just don’t run into them that much and they don’t really feature in terms of market share in the enterprise WLAN space. (If they do then my bad – write me a rude letter!)

All in all, in 2008 there were 16 (or more) WLAN Vendors out there playing in the Enterprise space or planning on getting into it in one way or another.  Fast forward to 2015 and my oh my how the landscape has changed!  It reads like a book from the bible!

HP Acquired Colubris and 3COM, and Juniper acquired Trapeze. Ericsson bought Belair and Wavion  got bought by their poor uncle Alvarion who went bankrupt never to be seen again.  Cisco bought Meraki, Juniper signed an OEM with Aruba and Extreme Networks bought Enterasys. Ruckus Wireless and Aerohive grew their customer bases at record speeds.  Motorola wandered off with a Zebra to live the simple life while Ubiquiti entered the Wireless ISP and Enterprise space and gave everyone the shock of their lives! Airtight entered the enterprise WLAN market with bang but seem to have gone into hiding.  Meru started downsizing as the dust was settling and then HP acquired Aruba.  Which leaves us roughly where we are now (I think).

Today we are left with (in no particular order):

  • Cisco
  • HP-Aruba
  • Ruckus Wireless
  • Ubiquiti
  • Aerohive
  • Motorola – Zebra
  • Extreme Networks
  • Xirrus
  • Ericsson
  • Alcatel Lucent
  • Juniper
  • Meru

So that’s a shrinkage of about 30% in the number of vendors over the last 7 years or so. Only TWO of the big names in 2008 are still really doing anything big (in terms of market share) today.  All the other big names in the industry from 2008 have been aquired.  Some of the names in my 2015 list aren’t certain to exist for very much longer either.

This  leads me to my second point and the one that I actually wanted to cover in this post.  Could it be that 2015 and 2016 will see an as-yet unprecedented consolidation in the Enterprise WLAN industry?

Here is my reasoning for thinking this may be the case.

First off, competition in the WLAN industry is FIERCE.  Secondly, the WLAN industry requires A LOT of effort in research and development to meet new standards and keep up with evolving market trends and demands.

As an example, have a look at how valuable Juniper’s acquisition of Trapeze is now.  Just look at what HP has out of their Colubris and 3Com Wireless acquisitions.  Nothing, Nada, Zilch.  They literally threw them out after sweating them for as long as they could while steadily losing to newer start ups.  Neither of those companies invested the required effort to keep their acquisitions up to date or to differentiate themselves sufficiently from their competitors.  Both of them were punished for it by losing market share.  Juniper ultimately gave in and signed an OEM with Aruba until HP decided enough was enough and just acquired Aruba.

As an aside here, the WLAN industry is interesting to me primarily because there is such a big opportunity for differentiation.  You can’t simply get away with selling “vanilla” Wi-Fi.  Everyone has their own angle. It’s a fun industry precisely because of that.

Back to the point, we can all agree that the WLAN industry is characterised by intense competition and the need for continuous investment in technology to stay competitive.  Given these two factors, what does the future hold for our beloved WLAN vendors?

I am willing to bet (a small amount) that 8 of the names in my 2015 list are uncertain of a place in 18 months time.

Here are my thoughts:

  • You need to have an active focus on WLAN. You can’t just buy your way into the industry.  It’s like foreign aid:  it is not a problem you can fix with money, you need passion and focus and blood sweat and tears in it too.  If you’re the proud new owner of a WLAN company, be careful, you tread a path many have taken and later abandoned.
  • If you are not making a profit or you’re constantly going in for funding rounds to stay operational, you’re dog meat.  This industry requires steady investment to stay relevant in the enterprise.  You cannot keep investing money if your company is constantly running at a loss and you don’t expect to be able to stem the flow of cash.  At some point, someone will want to get their money back or stop giving you more.
  • You can’t just keep doing the same thing and give it a new name every few quarters. The WLAN industry has made massive leaps forward in radio technologies and feature sets over the last 8 years.  So has the internet, wired networking and cloud computing.  Unless your equipment and your differentiating features are actually taking advantage of those technologies and trends, you won’t stay competitive or relevant.  You also need to check that your specific implementation does not actively degrade radio performance or make moving with the times harder.  Wavion had that problem migrating their proprietary beam forming technology from 802.11g to 802.11n and they are now nothing more than a pock mark in the market’s memory.
  • You must diversify.  Being brilliant in only one market vertical is a great accolade to your engineers but in my opinion is a poor sales strategy.  Many large enterprises today have facilities that could arguably fit into different market verticals.  To serve those customers your solution needs to be good enough (read: fit for purpose) to work anywhere.
  • No, building switches will not save you.
  • If you want to do SP Wi-Fi, you need to be in the Enterprise space too and you need to be strong financially. Feature convergence between the two verticals is very, very real and enterprise product sales will pay the bills for all the SP focused development work needed to build what I like to call super-size-me networks.
  • Your features must add genuine value to the customer.  The WLAN marketplace is wising up and it gets harder and harder to sell someone features they don’t need and will not use, or worse, features that don’t work as advertised.
  • Good WLANs rely on QUALITY rather than QUANTITY.  You can only get away with selling double the number of APs at 1/2 the price each for so long until your customer’s network self interferes or melts under the load.  The vendors with the better radio technologies and APs will have the ability to deliver better RF designs allowing them to continue to grow a more loyal following.

There has been a huge amount of change in the WLAN industry of late.  It’s interesting to look at what might happen to those vendors that rely on OEM partners for their equipment given the recent HP-Aruba tie up. Having watched the performance of a few WLAN vendors in the market place, looking at the direction of some of their financial results I believe that there are quite a few vendors out there who are going to have an exceptionally rough 18 months.  Regardless of what the market research companies have to say about it, I strongly believe that at the end of 2016 there may only be a handful of big Enterprise WLAN vendors left.

I think it might be quite a brutal process to bear witness to.

Rob.

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