The networking giant will pay $450 million in stock and assumed options for the company, which focuses on centralized management of thin access points from a feature-rich switch and companion software.
As expected, Cisco Systems Inc. on Tuesday announced a definitive deal to buy wireless LAN switch startup Airespace Inc.
The networking giant will pay $450 million in stock and assumed options for the privately held company, according to officials at Cisco in San Jose, Calif. Pending federal approval, the deal is expected to close by the end of April, officials said.
Airespace, also based in San Jose, will join Ciscos Data Center, Switching and Wireless Technology Group, led by senior vice president Luca Cafiero. Founded in July 2001, Airespace has about 175 employees.
Airespace is one of a handful of companies that remain in the WLAN switch space, which focuses on centralized management of thin access points from a feature-rich switch and companion software.
Read more here about Ciscos acquisition talks with Airespace.
Other companies in the space include incumbent Symbol Technologies Inc. and startups Aruba Wireless Networks Inc. and Trapeze Networks Inc. Airespace, Aruba and Trapeze, along with Cisco, have been vying for a major contract to update Microsoft Corp.s massive campus WLAN, which currently uses Cisco hardware. Airespace has been a front-runner to win the deal.
Ciscos participation in the WLAN switch space up until now has been a strategy called the SWAN (Structured Wireless Aware Network). Among various management offerings, SWAN includes a wireless blade called the WLSM (Wireless LAN Services Module), which fits into its Catalyst 6500 networking switch. Generally, WLSM customers are those who already owned Catalyst 6500 switches. The company has yet to release a WLSM for any of its other switches.
In the near term, Cisco will continue to offer both the SWAN and Airespace product lines. Cisco officials say plans call for eventual integration, but that the personnel on both sides should remain intact.
"At the close of the deal, well offer both sets of products," said Bill Rossi, vice president and general manager of the Wireless Networking Business Unit at Cisco. "The whole SWAN vision is really unchanged. The discussions that weve had over the last several weeks indicate that it integrates into our portfolio quite nicely."
Ciscos feature-rich access points are notoriously expensive. The company has considered but has never unveiled a line of thin access points; Airespace provides that. Furthermore, Airespaces Airespace Control System software is widely considered more comprehensive and easier to use than Ciscos WLSE (Wireless LAN Solution Engine).
"It makes a lot of sense," said Craig Mathias, principal at Farpoint Group, a consultancy in Ashland, Mass. "Clearly, Cisco doesnt have that class of product today. The core issue will be integrating all that [management] software. That will be a big deal, but not impossible."
Cisco officials noted that Airespaces software was key to the acquisition decision.
"If you look at their expertise in both control and management, thats what we didnt have," Rossi said. "And Airespace does. Our management software was designed for the vertical market, for customers who were used to managing [feature-rich access points.] Ultimately, we plan to merge into one cohesive, single product line."
Shaking up rivals business plans.