Partners: Brocade's Acquisition Of Ruckus Wireless Creates More Formidable Foe To Cisco
Brocade Communications is beefing up its networking portfolio with an estimated $1.2 billion purchase of wireless vendor Ruckus Wireless, which channel partners say creates a much more formidable foe against networking leader Cisco Systems.
Brocade CEO Lloyd Carney said in a blog post that the combined companies will create the No. 1 vendor in storage-area networking and service provider Wi-Fi; the No. 2 player in data center networking; and the No. 3 vendor for enterprise wireless LAN and enterprise edge networking in the U.S. and EMEA (Europe, the Middle East and Africa).
"Ruckus has always had a challenge of not being able to offer a switch that's their own brand," said Gary Berzack, CTO and COO of New York-based eTribeca, a solution provider and Ruckus partner. "This is huge news for Ruckus partners because Brocade make a family of switches and includes lifetime replacement on a number of them. So there's a nice match with a lifetime replacement on some of the Ruckus product line."
Carney said Ruckus' wireless solutions will add a "high-growth and highly complementary" product category to Brocade's storage, data center, campus and mobility networking solutions.
In early trading Monday on the New York Stock Exchange, Brocade's stock fell more than 15 percent to $9, while Ruckus shares jumped 30 percent to around $13.
Solution providers say the combined technologies will give channel partners new firepower to better compete against networking giant Cisco.
"Cisco has a highly complex portfolio of wireless and switches, and our engineers spend a considerable amount of time working through both the Cisco product line and the certifications," said Berzack. "Cisco has just changed their certification process and some partners might be looking for other enterprise options for the non-diehard Cisco customers … This [acquisition] is nice for the small to mid-market and state and local government to take a fresh look at."
Cisco did not respond for comment by the time this story was posted.
Barry Shevlin, CEO of Vology, a Tampa, Fla.-based solution provider that partners with both Brocade and Ruckus, says the acquisition "absolutely" turns up the heat on Cisco while boosting Brocade's credibility.
"This is a great addition because it gives more credibility to Brocade on the IP side. They've done a great job building it out and not just being the fiber channel guys anymore," said Shevlin. "We're excited about this."
Shevlin says the acquisition will also help increase channel sales once the integration is complete.
"It's going to make the sales process easier once it's integrated. We think it will be a smooth and more elegant solution, which [will] result in selling more," said Shevlin.
San Jose, Calif.-based Brocade says the acquisition is an important step toward its vision of creating a new type of networking company needed in the era of digital transformation.
"The combination of Brocade and Ruckus will create a pure-play networking company that has market-leading solutions spanning from the most critical part of the data center to the wireless network edge," Carney said on his blog.
Sunnyvale, Calif.-based Ruckus recently touted itself as the largest pure-play wireless vendor following Hewlett-Packard's acquisition last year of Aruba Networks for $3 billion.
In an interview with CRN in June, Ruckus CEO Selina Lo said its enterprise business represents about two-thirds of its total revenues, which is nearly 100 percent channel.
Lo also said she planned to keep Ruckus a standalone company. "Ruckus has been profitable for the last four years and we will continue to stand alone," Lo said in June.
Both Ruckus and Brocade recently unveiled acquisition plans. In October, Ruckus announced plans to acquire Wi-Fi onboarding and security software specialist Cloudpath Networks. Just last week, Brocade revealed that it had acquired startup StackStorm, a provider of software for automating data center operations.
eTribeca's Berzack says there are several questions still lingering about the acquisition outcome, such as whether Ruckus will be able to maintain its agility.
"Let's hope that the agility that we have seen at Ruckus is not lost with this merger," said Berzack.
He's also interested in how the two companies will team together on the distribution side. "If you look at the distributions, you don’t have Ruckus in some of the strong Brocade distributors," he said. "I'm also interested to see what happens in (the) government sector, where Brocade is very well represented."
Under the agreement, Ruckus stockholders will receive $6.45 in cash and 0.75 shares of Brocade for each share of Ruckus. The transaction price may fluctuate until the close, according to the companies.
Brocade expects the acquisition to close the third quarter of Brocade's current fiscal year. The Ruckus organization inside Brocade will be led by Lo, who will report directly to Carney.