HP will be spending a whopping $2.7 billion to acquire Aruba Networks which clocked $729 million in 2014. The deal value is $3 billion.
Four important factors were the main triggers for HP to decide on the $2.7 billion acquisition of Aruba Networks.
First, Aruba, a Sunnyvale-based wireless networking company with nearly 1,800 employees, had reported compound annual revenue growth of 30 percent over the last five years.
Second, HP Networking struggled in the WLAN space as its revenue declined 15.1 percent in Q4 2014 year over year and 7.6 percent sequentially. HP’s market share fell to 4.3 percent Q4 2014 from 5.4 percent from Q4 2013. The decline has happened in the previous several quarters as well, according to IDC data.
Third, Aruba Networks WLAN revenue increased 29 percent, while market share increased to 11.8 percent in Q4 2014 from 9.8 percent in Q4 2013.
Cisco, which is on a recovery path, is the main rival of HP in the global WLAN space.
Cisco’s Q4 2014 enterprise WLAN revenue grew 7.5 percent and it has a WLAN market share of 48.4 percent in Q4 2014 – fueled by Meraki cloud-managed WLAN. Cisco’s WLAN market share increased marginally.
Ruckus Wireless is yet another rival. Its enterprise WLAN market revenue rose 15.7 percent. Ruckus accounts for 6.2 percent of the overall market against 5.7 percent in Q4 2013.
HP is aiming to tap the huge potential in the WLAN space. The combined consumer and enterprise WLAN (wireless local area network) market rose 7 percent in Q4 2014, said IDC.
Fourth, HP Chairman Meg Whitman wants to utilize the combined strength of Aruba’s WLAN and HP’s switch business.
“By combining Aruba’s wireless mobility solutions with HP’s switching portfolio, HP will offer the most secure networking solutions to help enterprises easily deploy mobile networks,” said Meg Whitman during the announcement.
IDC said enterprise WLAN segment grew 7.4 percent in 2014 and 8.5 percent in 2014.
The 802.11ac standard accounts for over 30 percent of dependent access point shipments and 44 percent of dependent access point revenues – fuelled by complete indoor and outdoor 802.11ac portfolios.
The consumer WLAN market increased 6.5 percent in Q4 2014.
Worldwide consumer 802.11ac WLAN revenues grew 155.6 percent, with shipments surging 206.6 percent. Consumer 802.11ac equipment revenues grew 100 percent or more in most regions, performing especially well in the Europe, Middle East, and Africa (EMEA) and Latin America regions, with 479.2 percent and 344.2 percent growth respectively.