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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.
HP to Buy Aruba Networks for $3 Billion
HP also is getting a growing company: Aruba had $729 million in sales in fiscal 2014 and has seen a growth rate of 30 percent a year over the past five years. HP wants to leverage Aruba’s technology and expertise to enable customers to more easily shift their legacy networks to an architecture more adapted to the growing mobility-centric workplace, a trend that will be accelerated as the 802.11ac standard becomes more widespread. The standard will mean faster speeds and improved access to cloud-based applications.
The deal for Aruba will give HP the tools to help in this transition, according to Whitman.
“Enterprises are facing a mobile-first world and are looking for solutions that help them transition legacy investments to the new style of IT,” HP’s CEO said in a statement. “By combining Aruba’s world-class wireless mobility solutions with HP’s leading switching portfolio, HP will offer the simplest, most secure networking solutions to help enterprises easily deploy next-generation mobile networks.”
It also will be a boon for Aruba and its customers, according to Ben Gibson, Aruba’s chief marketing officer. Aruba will be able to leverage HP’s global presence, broad customer base and channel partners to extend the reach of its wireless technology, Gibson told eWEEK. In addition, both Aruba customers and its 1,800 or so employees will see Aruba’s leadership team stay intact as Orr and Melkote take the reins of HP’s networking business, ensuring stability after the deal closes.
HP officials also stressed the desire to leverage the Aruba brand as it grows its networking efforts.
In addition, Aruba and HP share similar thoughts in such areas as go-to-market efforts and the embrace of open networking systems that offer customers flexibility and choice, Gibson said. Such products as Aruba’s AirWave management system for wired, wireless and remote networks and the ClearPass access management framework will remain vendor-agnostic and work with an array of third-party products, Gibson said.
“It’s an opportunity for Aruba to take our [wireless] solutions [and] combine them with the solid and very strong wired portfolio that HP brings to the market,” he said.