Aruba Networks, Alcatel Partner on Wi-Fi

The companies strike a three-pronged deal that involves an OEM agreement, co-development of products and a cross-licensing agreement.

French telecom hardware giant Alcatel has a new Wi-Fi partner.

Wireless LAN switch maker Aruba Networks Inc. on Tuesday announced a deal with Alcatel S.A., which includes both a reselling agreement and a development partnership.

The deal has three prongs: a straight OEM agreement wherein Alcatel will resell rebranded Aruba switches and access points; the co-development of voice-over-Wi-Fi products; and a cross-licensing agreement that includes existing technology from both companies.

"It extends service and support beyond just moving boxes," said Don LeBeau, CEO of Aruba Networks in Sunnyvale, Calif. "Its the integration of other technologies thats of greatest appeal."

That the deal goes beyond an OEM agreement justifies the partnership, said LeBeau, who has publicly disparaged OEM partnerships in the past—most notably criticizing a year-old OEM deal between Alcatel and fellow WLAN switch maker Airespace Inc.

Alcatel rival Cisco Systems Inc. announced plans to buy Airespace in January. The merger, expected to close as soon as this week, has put Alcatel in the position of needing a new OEM partner for Wi-Fi equipment. The same goes for rival Nortel Networks Ltd., which also has an OEM agreement with San Jose, Calif.-based Airespace.

/zimages/3/28571.gifClick here to read about Ciscos plans for Airespace products.

But Alcatel officials said they had been looking for a second partner anyway.

"[The acquisition] sped up the decision of the partnership with Aruba, but even before the acquisition was announced or even rumored, we had started a discussion with other sources," said Jean-Luc Ronarch, wireless LAN product manager at Alcatels U.S. office in Calabasas, Calif.

"When we kicked off the second partner investigation, there was market pressure for sure on the Airespace side," he said. "You could sell their products for a lot of money at the end of 2003 and the end of 2004, but toward the end of 2004, we felt a lot of competitive pressure."

/zimages/3/28571.gifNortel Networks is teaming with other companies to develop WLAN mobility solutions. Click here to read more.

Aruba officials said Alcatel also wanted to team up with a company for whom Alcatel would be the main OEM partner.

"Since Nortel was the primary partner of Airespace, Alcatel was not getting the attention it deserved," said Keerti Melkote, vice president of product management at Aruba. According to Melkote, Aruba passed on a deal with Nortel because they couldnt agree on partnership terms.

"I think [the decision to partner with Aruba] goes beyond Nortel," Ronarch said. "Nortel was part of it, though."

Airespace officials, soon to be Cisco officials, maintain that Aruba was just late to the OEM game.

"From my perspective, Aruba is playing Airespace Idol," said Alan Cohen, vice president of marketing at Airespace. "Its Me too OEM. I feel like Paul McCartney walking into an airport and hearing a muzak version of Hey Jude."

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