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HP with Aruba a stronger competitor to Cisco

Hewlett-Packard's $2.7 billion Aruba acquisition would bring wireless networking technology expected to make HP a stronger competitor against Cisco.

Hewlett-Packard's pending $2.7 billion acquisition of Aruba Networks would create a networking portfolio of wired and wireless products that would go head-to-head with Cisco.

HP announced the acquisition March 2, saying it would pay $24.67 per share in cash for Aruba. The transaction is expected to close by the end of October.

HP is expected to combine Aruba's wireless LAN (WLAN) technology with its wired gear to create a portfolio that rivals Cisco's, said Farpoint Group analyst Craig Mathias.

Aruba has reported a compound annual growth rate of 30% over the last five years, and Gartner has listed the company second to Cisco in the WLAN market in terms of technology.

While the acquisition could slowdown Aruba's ability to introduce new features, it would be outweighed by the benefits the company would reap by having access to more resources, analysts said.

"The reason HP is buying Aruba is for its innovation, so from a customer perspective, I don't see any major concerns," IDC analyst Rohit Mehra said.

Ben Gibson, Aruba's CMO, promised the "same Aruba with better resources" in an interview with Search Networking.

What Aruba customers should expect

Aruba customers should expect changes in the company's product roadmap as a result of the acquisition, Mehra said. HP will have to decide which duplicate products to keep and which to drop in order to avoid having competing technology in the same portfolio.

"[HP] will definitely realign the wireless capabilities and what [products] they'll want to … continue to develop," Mehra said. 

Another uncertainty is the OEM partnerships Aruba has with equipment manufacturers like Dell and Brocade, which compete with HP.

"I think these partnerships are likely to be questioned down the road, given the industry dynamics around the roles these vendors play in this very competitive market," Mehra said.

The acquisition points to the ongoing trend of market consolidation in the WLAN market, Mathias said.

"It's taken a long time to see consolidation in the WLAN space, but now we are seeing two of the strongest networking players combining, so it's very significant," he said.

HP plans to wrap Aruba into its Enterprise Group, which HP is expected to launch as a separate company by the end of the year. Aruba's current chief executive, Dominic Orr, and Chief Strategy and Technology Officer Keerti Melkote would lead the Aruba division, Aruba's Gibson said. They will report to Antonio Neri, head of HP's Enterprise Group.

Let us know what you think about the story; email Gina Narcisi, senior news writer, and follow @GeeNarcisi on Twitter. 

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