HP to pay $3bn for Aruba Networks in WiFi and Internet of Things boost

HP is paying $3bn for networking firm Aruba

HP has announced a $3bn deal to buy Aruba Networks to help meet the network requirements of businesses, including around the Internet of Things (IoT) which will see more and more devices requiring network access and management.

HP said that it will retain the Aruba brand once the deal is completed, and the new unit will be headed up by current Aruba CEO Dominic Orr. He will report to Antonio Neri, leader of HP’s Enterprise Group.

Meg Whitman, HP CEO, said that the deal will allow HP to meet the challenges of businesses in the new era of IT where networks and mobility are vital to support staff in their working day.

“Enterprises are facing a mobile-first world and are looking for solutions that help them transition legacy investments to the new style of IT,” she said.

“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.”

Andre Kindness, a researcher with Forrester covering infrastructure and operations, pointed out that Aruba is the third HP networking acquisition in recent years, after Colubris in 2008 and 3Com in 2009.

He was tentative in his assessment of the potential success of the deal for HP.

“I think Aruba’s competitors will be thrilled with this deal. It’s HP’s third such deal in six years and it struggled to combine those firms. HP customers may look at it as just another transition to go through,” he told V3.

Kindness said that it will be particularly tough for Aruba if the unit is subsumed into the servers, storage and networking division of HP, as this usually focuses all its efforts on servers.

“The money goes where the numbers are, so for things like R&D and sales and marketing, the only area of that division that made money last quarter was servers, so that is where the investment will likely go,” he said.

Despite this, Kindness noted that Aruba is the second biggest player in the WiFi space, and that the IoT market is growing all the time, which could provide benefits to HP as the segment grows.

“With things like connected lightbulbs and connected doors coming through, the WiFi industry is poised to explode, so that could help HP,” he said.

Quocirca analyst Clive Longbottom agreed that HP had the potential to make a success of the acquisition, but cannot afford another botched process.

“HP has to get this one right. The market is still not that pro-HP. Luckily, neither is it that anti-HP. The jury is mainly out,” he said.

“It has to embrace and use Aruba’s capabilities rapidly and effectively and manage the overall network, mobility, security and performance message.”

Aruba posted revenues of $729m in fiscal 2014 and currently has around 1,800 employees. It seems unlikely that all will survive the merger with HP, as there will undoubtedly be some overlap in job functions.

The decision to splash out $3bn on Aruba will not have been taken lightly. HP posted revenues of $26.8bn for the first quarter of its 2015 financial year, a decline of five percent on the same period last year.

The firm also revealed that splitting the company in two will cost over $2bn as it moves towards this goal for the end of 2015.

HP recently announced the acquisition of security firm Voltage, although no financial terms were disclosed.

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2 March 2015 | 4:05 pm – Source: v3.co.uk


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