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ARRIS International won't become a networking heavyweight by acquiring Broadcom's Ruckus Wireless and ICX campus switching businesses, analysts said. Instead, the company will likely expand into vertical markets that include large public venues, education and hospitality.
ARRIS announced this week that it would pay $800 million in cash for the units Broadcom acquired late last year in the $5.9 billion purchase of Brocade Communications Systems. ARRIS passed on buying the data center switching and MLX routing businesses that were also a part of the Brocade networking portfolio.
After announcing the Brocade deal, Broadcom, which manufactures chips for Cisco, Juniper Networks and Arista Networks, said it would sell off Brocade's enterprise networking operations to avoid competing with customers. Broadcom acquired Brocade for its Fibre Channel storage networking business.
ARRIS is primarily a supplier of video and broadband equipment, such as cable modems and set-top boxes that service providers install in homes. With Brocade networking, ARRIS is likely also to become a supplier of wired and wireless technology aimed at universities, airports, stadiums and convention centers, analysts said.
"ARRIS now has a pretty complete set of products for serving all of those markets, either directly or by partnering with someone like a cable provider," said Shamus McGillicuddy, an analyst at Enterprise Management Associates based in Boulder, Colo.
ARRIS could, for example, partner with Time Warner Cable or Comcast to package their IP video and voice communications with the Brocade networking gear, McGillicuddy said.
ARRIS not a 'networking heavyweight'
By focusing on specific markets, ARRIS avoids competing across the portfolio of established networking vendors, which sell a much broader set of products that cover the data center, the LAN and wireless LAN. ARRIS signaled its intent to stay out of the general networking business by passing on Brocade's data center switching and MLX routing products.
"Traditional enterprises will continue to prefer the likes of Cisco, Hewlett Packard Enterprise, etc.," McGillicuddy said. "ARRIS isn't becoming an enterprise networking heavyweight."
Rohit Mehra, an analyst at IDC, agreed, pointing out that the Ruckus portfolio cannot compete in industries that require the highest level of security. They include healthcare, finance and government.
"In terms of security, [Ruckus] certainly was a laggard if you were to compare it to something like a Cisco and an [HPE] Aruba," Mehra said.
Dan Rabinovitsj, COO for Broadcom's Ruckus business, will lead the Ruckus and ICX unit in ARRIS. The transaction is expected to close by the end of August, a month after Broadcom is scheduled to complete the Brocade acquisition.
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