Outgoing Meru CEO Sums It Up: Wired Is Not The Future12:03 PM EST Mon. Jan. 09, 2012
Meru Networks CEO Ihab Abu-Hakima in October confirmed plans to leave the wireless networking specialist after seven years, saying he had achieved "personal and corporate goals" and that the time had come to transition to a new leader.
He was named CEO in January 2005, and there's no doubt that in those seven years Abu-Hakima helped turn Meru into a wireless player -- one with a modest, but fiercely loyal group of channel partners, and one that gets its share of industry mentions alongside established wireless leaders such as Cisco and Aruba and scrappy, channel-centric upstarts like Ruckus Wireless.
Meru's momentum in the past two years has been tricky to evaluate; it had a successful IPO in 2010, but the company's stock price has continued to flounder. But Meru has stayed aggressive, making across-the-board additions to its executive team, staking much of its channel growth on sales of its virtualized 802.11n wireless technology and making acquisitions such as the September 2011 pickup of access control specialist Identity Networks.
To hear Abu-Hakima tell it, the company is hitting its stride, with Apple's iPad and the bring-own-your-device, or BYOD, phenomenon validating Meru's vision of an all-wireless enterprise network edge. In an interview with CRN Senior Editor Chad Berndtson this month, Abu-Hakima weighed in on Meru's growth, his pending exit, and what aspects of wireless technology are ripe for innovation. Excerpts of the conversation follow:
Why are you leaving Meru Networks?
I joined the company seven years ago this month, and the goals that I set when I joined were the goals that I had set with the board. Take a company -- a startup that had developed an absolutely unique way of delivering what I considered a next-generation enterprise network or what the enterprise would operate day-to-day on -- and establish traction for it in the industry. Build the company to a point where it could become a public organization and have direction, traction and momentum.
I feel that I have achieved that. It's obviously a lot of work to take a company from a position of no momentum to one where we're deployed in 56 countries and with more than 6,000 customers. It's the right time for me.
You listed a few growth metrics there to talk about momentum, but which metrics are most important to you?
Meru, as a company, developed a unique approach -- an original approach, a completely different approach -- to how to deliver a network that, if you like, is all wireless, to support what we believed were the ways enterprises were going to be operating on a day-to-day basis, which is in a completely mobile environment.
For me, the metrics included taking this vision, identifying early adopters -- the lighthouse accounts looking for a solution and validating that what we'd developed had a significant value proposition -- and then methodically and systematically expanding that footprint. So, for me, the metrics I would use include the establishment of a solid foundation of customers, a worldwide footprint, a footprint in all the different verticals you could think of, and ultimately becoming a public company with a successful IPO.
Are you happy with the performance of Meru's stock price since the IPO?
I am. When we went public, it was a very difficult time for the world economically. I think we were one of three or four tech companies that went public in 2010, and when we went public, one of the commitments we made to the Street was that we were a company that was profitable and that we would remain profitable for 2010. We've been profitable at a rate no other player in the networking industry here has been able to achieve. It was clear to us that this market was going to accelerate in terms of growth, and for us to accelerate in our growth we had to dramatically step up the investment in sales and marketing, engineering and other support organizations.
We made the public statement that we would do that in 2011 and we have executed on our three-year strategic plan to do exactly what we said we would do. We wanted to double our field organization, expand our channel partnerships and relationships and build a marketing engine -- a best-in-class marketing engine -- and focus on accelerating growth. The shift now is how do we accelerate helping our channel partners accelerate their own growth and become productive and profitable with Meru's products. I am pleased with where we are. The stock price will go up, and come down, but in the end it will reflect what we believe will be the end of the execution of our strategic plan. I am not concerned with the short-term status of the stock price.
And that plan explains the continued additions and changes to Meru's executive team, as well?
Yes, as a company evolves and grows, it's important to have the leaders on board who can help grow the company to that next level. We always believed we could take Meru public and grow this to be a substantial company. I wanted to bring on board a management team that knows what a $1 billion company looks like. We have a CMO, for example, who's been at global companies and knows what a $1 billion company looks like.
NEXT: Meru M&A Rumors Abound
How soon can Meru be a $1 billion company?
That's obviously not something I can answer directly. But let me say that as a core element of getting to that size, number one, you have to have the management team in place that can lead the company there, and number two, you have to have the right investments in the right places. The investment in our field organization and channel partner managers, and the investment in our channel partners themselves, with training, certification, co-marketing activities and the marketing engine we put in place, all of those are core drivers that will help us get there.
Can you update us on the CEO search?
It's a search that, as I've said publicly, is under way. Clearly the board is engaged in interviewing candidates. Beyond that, I can't really add much more information.
Another thing that keeps coming up with partners and in the industry is the M&A rumors around Meru. Are you looking to be acquired?
I've been hearing these rumors for seven years. I can assure you these rumors are always going to be around any company like this because that's just the nature of business in general, whether in the wireless industry, the storage industry, the cloud industry, it doesn't really matter. We hear this all the time. I'm not surprised to hear that and it doesn't affect us at all at this point.
CRN has talked a lot with Meru and other wireless providers about this idea of the all-mobile edge, with customers shifting their infrastructure completely wireless. I know it's hard to quantify, but how close are customers to reaching that state?
That's a very good question. I can tell you that from our own installed base, the vast majority of our customers are already there. When a Meru wireless network goes in, they're surprised at how quickly the percentage of day-to-day network traffic shifts from the wired infrastructure to the wireless. It's not unusual for our customers to be running 70, 80, even 90 percent of their traffic over wireless rather than wired. For our customer base, it's the norm.
A couple of years back, I would have told you that it's still going to take awhile for the rest of the world to realize that eventually we are going to have to move to this mode. But six months after the introduction of the iPad, I think this became an obvious thing to talk about with a prospect because the majority of computing devices coming into the enterprise are not only wireless, but there's no good physical way to wire them. That's how we as employees and workers want to access applications and data, and at Meru we envisioned our architecture from the ground up because this is only going to accelerate in the enterprise. Our customers are already there, and we're seeing this in financial services, in manufacturing, in education. I expect this to accelerate as a mainstream trend. The BYOD phenomenon is the core catalyst.
So it's bring-your-own-device that gets us to the all-mobile edge, in other words?
I would say so. When I reflect back over the years, it used to be the early adopters that became our customers. They were thinking in one of two modes. One was a visionary within an organization who was constantly asking, 'Why can't I do this wirelessly?' The other type was someone trying to do it wirelessly in architectures where devices were really controlling the networks instead of being controlled by the network as in a wired environment. So they would discover us and replace all of their wireless, as opposed to just casual use.
The whole BYOD phenomenon -- you can't just wire a smartphone and wire a MacBook Air and an iPad easily. I remember being very excited when the MacBook Air came out because this was one of the first mobile computing devices that [fit this bill] and people thought it was a niche product because you had to go through a lot of hoops if you wanted to wire it. We thought that was the shape of things to come. That's a watershed event.
NEXT: Room For A Stand-Alone Wireless Company?
There's been a lot of consolidation among wireless networking players, and there's this idea that with wireless' role becoming more important in a converged network infrastructure there won't be a place for stand-alone wireless companies anymore. What are your thoughts on that?
We believe in the all-wireless edge, and that enterprises and organizations are going to have to support their user community. There isn't an enterprise that doesn't have complete wired infrastructure in place, but they're buying wireless infrastructure and over time watching their wired infrastructure atrophy as the traffic moves to wireless. So someone looking to update a wired infrastructure, they might as well stay with their incumbent because it also doesn't make sense to have a wired infrastructure for the edge at this point. We give customers a real choice. We really don't think wired is the future.
I don't think anyone has to go in and rip out their wired [infrastructure] -- every enterprise has made the investment already, so why rip it out? They deploy wireless, and may start to think of it just as an overlay there for casual use. But as they realize that, wow, almost all of my users are using this infrastructure to access any application -- HD video, for example -- and not using the wired infrastructure, once the wired switches reach their end-of-life, and once the support contracts expire, they can actually reduce and shrink the number of switches they have. Maybe you have 10,000 ports, and you can eliminate 50 percent. You right-size the wired infrastructure and shift the support contract to the wireless.
Do you see continued consolidation among the wireless players out there?
If you look at any aspect of the tech industry, there'll always be consolidation and always M&A. Then, you always have startups that emerge because there's room for innovation in any region. If no one believed that, no software companies would be formed because Microsoft dominates everything, right? Or Intel dominates semiconductors?
So will there be consolidation within wireless? Absolutely there will be consolidation in wireless. But this is a growth market. Even with the number of players we have -- wireless vendors we have -- it's amazing how infrequently we see many of these other players. We see Cisco everywhere because everyone is a Cisco customer. They're feeding their customer base with older architectures of wireless, but we always see Cisco in every prospect. But this is a large market, and we don't see all of the other players all of the time. This is a natural process in the industry. There is always going to be room for innovation players like Meru.
Where, or in what aspect, is the next innovation going to happen in wireless?
When Meru was founded, it was founded based on this vision of the all-wireless edge or all-mobile edge in a wireless enterprise. You recognize that the medium for communications is spectrum, and you can't create more spectrum so you have to look at ways to continue to optimize that finite resource of spectrum.
Clearly, the way to do that is virtualization. You can expect there to be more innovation in virtualization with wireless, and expect to see some of that coming from us, including in how our APs work today. There will be more innovation in other parts of the solution, if you like, in the area of virtualization, and innovation in the area of leveraging virtualization and the cloud to deliver the resiliency and scalability of capacity on-demand for the emergence of the new mobile enterprise. I expect that's what you'll see.