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Aruba Networks on Monday confirmed it will acquire wireless mesh startup Azalea Networks. The deal, an offer of $27 million in stock and up to $13.5 million in cash over the next two years, gives Aruba another avenue for channel partners deploying advanced wireless mesh networks, especially in the outdoor industrial enterprises where the segment is fast growing.
Founded in 2005, Azalea is based in Milpitas, Calif., and according to Aruba did about $5 million in revenue in 2009. It does have U.S. and European customers and channel partners, but Azalea does the majority of its business -- about 100 of its 140 current customers -- in Asia, specifically China, said Michael Tennefoss, head of strategic marketing for Sunnyvale, Calif.-based Aruba.
"It allows Aruba's partners to provide solutions that reach all the way from the boardroom to the most remote wellheads," Tennefoss explained. "In the industrial enterprise, a lot of assets are distributed very far away, and typically cover very large areas." A standard wireless mesh network finds data packets hopping wirelessly from radio to radio, but latency often becomes an issue in demanding industrial and outdoor environments.
"Mesh network performance has not allowed those latency sensitive applications to work to their full potential," said Tennefoss. "Mesh has not been considered a primary form of communication but has been often relegated to a secondary role. That's the problem that Azalea set out to fix and through what they have, you can deliver broadcast-quality video and high-speed data over very long distances."
According to Aruba, Azalea has shipped more than 25,000 mesh nodes worldwide. Among the company's biggest deals was providing 600 mesh nodes for voice, video and Wi-Fi access over a 19-square-mile zone of Beijing during the 2008 Olympic Games.
"We think there's tremendous potential in areas like video surveillance and smart grid for the technology they've created," Tennefoss said. "If you stand back and say, if I'm a channel partner, what does this acquisition mean for me, well, now we have standalone solutions for voice and video communication that use mesh technology, so if I'm competing against traditional solutions I have a great advantage over them by using Wi-Fi. You can add video surveillance and other things to product facilities without pulling wires."
Aruba expects the acquisition to close by the end of August, which would put it in the first quarter of Aruba's 2011 fiscal year. Azalea will be absorbed fully into Aruba, Tennefoss said, and it's still working out the details of Azalea executives' new roles.
Aruba gains regional offices in the deal, including Milpitas and an operations center in Beijing to go along with Aruba's existing R&D centers in Bangalore and Sunnyvale.