Hewlett-Packard is buying Aruba Networks, adding a strong wireless and mobility element to its networking business.
HP and Aruba officials announced the $3 billion deal March 2, less than a week after rumors of the deal began to surface and a day before Aruba kicks off its annual Atmosphere user conference in Las Vegas. The deal, expected to close in the second half of HP's fiscal year, will combine HP's broad enterprise networking business with Aruba's wireless networking capabilities to give the tech giant a broader offering as the business world increasingly becomes more mobile.
Once the deal closes, the new HP Networking unit will be led by Aruba CEO Dominic Orr and Keerti Melkote, Aruba's co-founder and chief strategy and technology officer. They will report to Antonio Neri, head of HP's Enterprise Group.
The deal has been approved by the boards of directors of both companies.
The move comes at a time of transition for HP, which under CEO Meg Whitman has been undergoing a multiyear restructuring aimed at making the company financially stronger. At the same time, HP is in the process of splitting in two, with one company—which will be called HP Inc.—offering PCs and printers and the other—Hewlett-Packard Enterprise—selling enterprise solutions and services. That split is scheduled to be completed later this year.
The $3 billion deal for Aruba is the largest by HP during Whitman's tenure, and highlights the growing importance of wireless networking and mobility at a time when the use of such devices as smartphones, tablets, phablets and notebooks is increasing. The growing Internet of things (IoT) also will drive demand for greater networking capabilities. According to Cisco Systems, by 2019, there will be 5.2 billion people worldwide using mobile devices and 11.5 billion mobile connections, which will help drive a tenfold jump in global mobile data traffic.
Annual mobile traffic will hit 292 exabytes per year by 2019; last year it reached 30 exabytes, according to Cisco.
HP bolstered its networking business when it bought 3Com in 2010 and has worked to build up the portfolio over the past several years. However, in the last quarter, HP's networking unit saw an 11 percent drop in revenue, to $562 million, and while wireless networking was a component of the business, it still lagged behind some competitors.
With the Aruba deal, HP gets a strong wireless business that includes hardware and software for WiFi networks, from access points, switches and controllers to network management software and cloud-based management-as-a-service capabilities. Aruba targets a new generation of employees that it refers to as #GenMobile—highly mobile workers who demand nontraditional, flexible work hours and say they are more productive working from home.