Upsetting Rivals

By Carmen Nobel  |  Posted 2005-01-12 Print this article Print

The acquisition may be a thorn in the side of Ciscos networking competitors, specifically Nortel Networks Ltd., Alcatel SA and NEC Corp., all of whom resell Airespace equipment. "Cisco will immediately turn the WLAN business plans of Nortel, Alcatel and NEC on their heads," said Ken Dulaney, vice president of mobile computing at Gartner Inc. in San Jose, Calif. "There will be a wild scramble, possibly some buyouts, etc. These companies and their clients will be worried." Its not clear what will happen to the existing OEM agreements.
"Were going to have to figure that out," said Brett Galloway, CEO of Airespace, who said he plans to stay on with Cisco after the acquisition. He declined to say what his new position will be.
Cisco has been shopping around for a WLAN switch company off and on for quite a while. The company came very close buying Aruba more than a year ago, when the WLAN switch industry was still nascent, but ultimately decided to try developing a WLAN switch strategy in-house, according to several industry sources. Click here to read about Ciscos moves to strengthen WLAN security. When Cisco came calling again recently, Aruba turned down the offer, according to officials at Aruba in Sunnyvale, Calif. "They approached us a little before Thanksgiving, wanting to discuss potential possibilities," said Keerti Melkote, co-founder and vice president of product marketing at Aruba. "Were always open to partnerships, but they said that they wanted to control the technology. It was an acquisition or nothing. Once you get sucked in by a big player, it stifles innovation. And our vision at the end of the day doesnt match Ciscos vision of where the industry is going." The acquisition of Airespace marks a consolidation trend in the maturing WLAN switch space. German networking incumbent Siemens AG bought WLAN switch vendor Chantry Networks Inc. last month. Wireless security company Fortress Technologies last October acquired the technology assets of Legra Systems Inc., another WLAN switch company, which had focused largely on security. And Airflow Networks left the WLAN switch business in April. Cisco chief technology officer Charlie Giancarlo recently told eWEEK that he was looking to acquire security companies; the wireless industry also is buzzing with rumors that Cisco may acquire Airdefense Inc. "All the various companies in that market are potential acquisition targets," said Eric Janszen, a venture consultant at Trident Capital in Westport, Conn., and the former CEO of wireless LAN security hardware vendor Bluesocket Inc. Cisco has had an extensive and mixed history of wireless company acquisitions over the past several years. The acquisition of Aironet Wireless Communications—and its access-point hardware—in 1999 contributed largely to Ciscos leadership in the wireless LAN space. But Ciscos acquisition of fixed wireless player Clarity Wireless Corp. in 1998 foundered, and the acquisitions of in-building cellular players JetCell Inc. and Exio Communications Inc. in 2000 led to few innovations from Cisco. Check out eWEEK.coms for the latest news, reviews and analysis on mobile and wireless computing.


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