HP Buys Aruba: What's Next? - InformationWeek
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3/2/2015
05:15 PM
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HP Buys Aruba: What's Next?

HP is buying Aruba Networks for nearly $3 billion. That's the simple part. The hard part is figuring out what the purchase means for your network.

6 Microsoft Acquisitions: What Do They Mean?
6 Microsoft Acquisitions: What Do They Mean?
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HP is buying Aruba Networks. That's the simple part. Figuring out whether this is a good thing for the companies and their customers is where things get interesting.

While rumored for a while, HP and Aruba made it official on March 2.

Aruba's selling price was $24.67 a share, or nearly $3 billion. While not the premium over the most recent share price that some acquisitions command, the price is only 1% below Friday's close -- a close that represented a significant run-up in share price due to speculation about this merger.

The Wall Street Journal quotes Cantor Fitzgerald analysts as saying that the merger is a good thing for both partners, though the analysts also noted that they thought HP should be spending its money on cloud and big data technologies rather than wireless networking. The view from technology analysts we talked to was similar, seeing some good potential coupled with nontrivial risk.

Charles King, principle analyst at Pund-IT, Inc., said, "I think it will probably be good for both parties. That's because there's very little overlap between the products HP already has and those Aruba focuses on. They're pitching this as a combination of Aruba wireless and HP backend switching."

He added that the combination of Aruba and HP seems designed to go after a single target.

"Aruba is considered to be the second largest player in the mobile space, and by combining with HP the two will be in a better position to take on market leader Cisco," King said.

His focus on the large enterprise space was echoed by other analysts and commentators we spoke with.

Tom Hollingsworth, Network Computing columnist and writer at The Networking Nerd, said that he sees the combination of the two companies as a clear infrastructure play.

"[Aruba's] Clear Path technology helps [HP] from a management perspective. There was a lot done to integrate it into [HP's] Intelligent Management Center (IMC) already," Hollingsworth said, explaining, "Wireless is the new edge, and without [HP] having a wireless strategy they would have been left in the data center market only. When you were once the second largest infrastructure company and you don't have a wireless play, you're going to find yourself getting left off of a lot of bid sheets."

HP CEO Meg Whitman reinforced that message in a statement from the HP press release announcing the acquisition: "Enterprises are facing a mobile-first world and are looking for solutions that help them transition legacy investments to the new style of IT. 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."

A ready fit between the networking product lines of the two companies doesn't ensure that the merger will be painless. Lee Badman, a network architect for a large private university, sounded a cautionary note in a telephone interview.

"I've got to imagine that HP is hoping that it will bring them new capabilities but I have to think that it will come down to integration. Cisco has done a good job of not ruining Meraki, so if HP handles Aruba right they should get a good opportunity to make things work. If they immediately rebadge everything and try to get people to forget about Aruba, I think that will be a big mistake," Badman said.

Badman also gave voice to a reality that Aruba's acquisition could address for HP. "A lot of people just lost track of HP from the wireless perspective. If you're not a switch customer, you just don't think about HP a whole lot," Badman said.

[ Read about the world's coolest data centers. ]

The industry will now begin the watch for signs of HP getting the acquisition right (or wrong). Hollingsworth doesn't think it will be a long wait. "We're going to see new products right away. The wording from Aruba makes me think that it's going to be similar to Cisco and Meraki, where [HP is] going to do some integration but in general let Aruba go," he said.

Both Hollinsgworth and Badman expressed fears that HP could get the merger very wrong -- and that getting it wrong would be a shame from many different perspectives.

"There's some serious ill will in the market about HP buying a wireless company, so if they're willing to just take a check at the end of the month and keep hands off, the community will feel much better about this," Hollingsworth said.

Badman was even more blunt in his assessment.

"There's a lot of potential for HP to mishandle it, but I hope they don't. I just have this techie sense of mourning that the thing that was Aruba will become something else," he said. "To me it feels like HP being attached to Aruba almost takes something away from the Aruba brand. It seems like something good and pure and strong that had grown up on its own has been made a bit more uncertain."

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Curtis Franklin Jr. is executive editor for technical content at InformationWeek. In this role he oversees product and technology coverage for the publication. In addition he acts as executive producer for InformationWeek Radio and Interop Radio where he works with ... View Full Bio
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Joe Stanganelli
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Joe Stanganelli,
User Rank: Ninja
3/16/2015 | 12:34:19 AM
Re: The last link
Yes, to clarify, I was speaking in terms of perception -- not in terms of actuality.  You are right; they are still seen as "printer people" -- and I think they would very much like to move past that notion.
SaneIT
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SaneIT,
User Rank: Ninja
3/10/2015 | 8:22:18 AM
Re: The last link
Well I'll step out onto this limb a little and say that HP has managed to be more than printers for a quite some time.  I've run HP server hardware in various forms going back as far as the early 90s and I've owned a few of their switches too but I get your point, most people see them as the printer people.  I don't know that buying Aruba will make them the wireless people but I can see it allowing them to compete with Cisco in smaller markets by leveraging the integrations they already have with Aruba's wireless controllers.  I just wondered if you had some insight into them moving past the middle sized networking world into a Telco centric model the way we're seeing Google push with their cellular alternative.
Joe Stanganelli
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Joe Stanganelli,
User Rank: Ninja
3/10/2015 | 12:09:00 AM
Re: HP Buys Aruba: What's Next?
To that, I'd respond with the age-old adage: "A journey of a thousand miles begins with a single step."
Joe Stanganelli
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Joe Stanganelli,
User Rank: Ninja
3/10/2015 | 12:07:30 AM
Re: The last link
I think it's a bit too early to tell.  HP is desperately trying to move beyond printers, and the acquisitions -- while helpful and progressive -- will ultimately only be about as helpful as what the company winds up doing with them.

Ask me in a year.  ;)
zerox203
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zerox203,
User Rank: Ninja
3/9/2015 | 8:58:16 PM
Re: HP Buys Aruba: What's Next?
I tend to agree with a mix of caution and optimism for any mergers and acquisitions news, but I'd say I'm even a little more skeptical than most of the others here when it comes to this one. Several of the analysts mentioned that unless you're buying switches, HP isn't even on your radar - to that I'd add, even if you are buying switches, is HP really at the top of your list? Others are right that a wireless strategy for them is a must, and it gets their names in the headlines (hey, here's one now!), so I don't think it's necessarily a bad move per se, but... I don't know. Is HP really doing anything innovative in that space that will be supplanted by what Aruba is doing with mobile/wireless, or are they just using this to play catch-up? History has shown that that rarely works out well (I'm thinking Yahoo!).

In other words, I'm more concerned that this will be bad news for Aruba and consequently for the rest of us. Of course, it's speculative at this point, but it's not outside the realm of possibility that they're jumping on board a sinking ship. While we're speculating, It's not impossible that if HP goes down Aruba might still survive and be sold off to someone else. I suppose big changes like this were/are bound to happen to all the names we know eventually. Others are mentioning IoT - add to that SDN and hyperconvergence in the datacenter, and it's actually more impressive that the old guard has held on this long. The rise and fall of giants is not unique to the tech industry, but it seems to happen in some unusual ways here. EMC + VMware is a good example, as VMware is obviously the larger brand in terms of mindshare. I wonder what other headlines we'll hear in 2015.
SaneIT
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SaneIT,
User Rank: Ninja
3/9/2015 | 8:26:10 AM
Re: The last link
@Joe, I'm interested in your take on this, I had lunch with an Aruba reseller and they are very excited that Aruba is now part of HP, apparently Aruba has been building wireless devices for several other manufacturers so that part seems like a win for HP, the roadmap for HP's wireless plan is a little unclear though so I'm curious what everyone thinks is going to happen.
Joe Stanganelli
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Joe Stanganelli,
User Rank: Ninja
3/4/2015 | 11:46:05 PM
Re: The last link
I think that misery will find that it does not love company.
SaneIT
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SaneIT,
User Rank: Ninja
3/4/2015 | 11:43:13 AM
Re: The last link
I really do hope that this is more than HP just adding to its consumer electronics offerings.  If they start integrating Aruba's technology with their edge switching I think they will be getting somewhere.  If it is just to put HP logos on access points I'm going to be a little disappointed.  I know that they aren't aiming to be Cisco but another competitor in that market would do us all some good. 
Curt Franklin
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Curt Franklin,
User Rank: Strategist
3/3/2015 | 5:40:09 PM
Re: The last link
@Joe, you have a unique perspective on this: Do you think that rolling up wireless broadband under Title II is going to have any real impact on customers?
Curt Franklin
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Curt Franklin,
User Rank: Strategist
3/3/2015 | 5:38:48 PM
Re: The last link
@Li Tan, Cisco has been building their wireless expertise for years, so HP didn't really have a choice unless it was going to simply cede all end-to-end RFPs to Cisco. I think the interesting question will be what some of HP's competitors (like Dell) do now that Aruba is going under the HP umbrella.
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