Xirrus Founder Sounds Off On Brocade's Ruckus Acquisition, Expects Ruckus Partners To Jump Ship

Xirrus: A Safe Haven For Ruckus Channel Partners

On the heels of Brocade Communications' news that it plans to acquire Ruckus Wireless for an estimated $1.2 billion, wireless vendor Xirrus sounded off on the acquisition, market consolidation and the buy's impact on channel partners.

Dirk Gates, founder and executive chairman of Thousands Oaks, Calif.-based Xirrus, is expecting to see a rise in the number of Ruckus channel partners' jumping ship.

Gates, who has nearly three decades of experience in wireless, weighed in with CRN on the future of the industry, the effects of a Brocade-Ruckus merger -- such as an exodus of partners -- and whether he expects larger vendors to contact him seeking to acquire Xirrus.

Are you expecting Ruckus channel partners to leave and join Xirrus?

After the Aruba HP acquisition, and I'm sure it will happen again this time, we'll probably see lots of opportunity to expand our channel. Post the Aruba HP acquisition, I think we've added about a 30 percent increase in the number of channel partners that are interacting with us and looking to be a reseller, and we'll see a similar surge once the Ruckus acquisition closes.

What types of partners do you think will jump ship?

So for those partners who are truly trying to stay at the leading edge with the most innovative technology in the industry, they're going to look toward those independent, standalone companies because they're going to be able to move faster and be more nimble with the technology. We've had that, but it will be strengthened and reinforced by the fact that there are fewer other nimble, fast-moving independent Wi-Fi companies around.

I see this as a great opportunity for us to expand the channel partners we're working with.

Why would Ruckus partners be fearful of an acquisition?

One of the things that makes it interesting for the remaining wireless independents is [that] there's a perception when a company gets acquired by a much larger company that innovation slows down. There's a lot of work on integration, and getting systems to work together and the equipment to work together can take time.

The channel goes through a settling out at this point. If you were a reseller of Ruckus equipment and all of a sudden now they're gone, and now Brocade, you have to evaluate whether or not you want to try to become a Brocade reseller or whether you want to fill that slot in your wireless portfolio with someone else.

Do you think larger vendors, like a Cisco or Dell, are now looking more closely at Xirrus as a possible acquisition?

As these companies disappear inside larger ones, then other companies they partnered with -- whether they were meeting in the channel or OEM -- those companies … undoubtedly will be looking around the industry trying to figure out their strategy going forward.

I have no doubt we will probably find opportunities to go partner with larger companies, either in a resell agreement [or] potential OEM agreements -- and where they go from there, it's hard to say.

How will Xirrus not be lured into being bought by a larger company?

There's plenty of opportunity still in the [wireless] market for lots of vendors.

The great news about the market is it's growing leaps and bound. It's still one of the hottest-growing segments of the market. What consolidation opens up is the opportunity for the folks like ourselves and Aerohive [Networks] that are left remaining as independents [is] it gives us an opportunity to do more partnering in the ecosystem.

So vendors will be looking at Xirrus for more of a strategic technology partnership?

Ruckus had a number of partners they we're working with, as did Aruba. Usually what happens when you get sucked into one of these partner companies [is] the other large companies that had been partnering with those now-acquired companies start to reevaluate, "Who do we want to be working with for technology?"

So I suspect that it opens up lots of opportunities for ourselves and Aerohive and other remaining independents to have partnerships with these folks.

What's your overall thoughts on the Brocade-Ruckus acquisition?

It will be interesting to see Brocade's campus networking business evolve at this point. Ruckus has had pretty strong presence in the carrier service provider industry, which is something that will be relatively new in the Brocade side. It could be an interesting course of expansion for Brocade. … It's going to be an interesting combination.

Do you think Ruckus customers will stay on board?

Hopefully the existing customer set with service providers and carriers are patient with this. 'Cause there's no doubt there's going to be a challenge pulling together companies of this size and getting them to work smoothly together. I have been there myself.

Where is the wireless market heading with all of this vendor consolidation?

What you're seeing now with the consolidation is finally, a realization … that the edge of the network is going to be all wireless. Basically wires will be relegated to the data center and everything being done at the edge of the network is going to be done wirelessly.

So now it's a critical technology, and there's a number of large vendors -- Brocade being the most recent one -- that has woken up to this realization that, "We have to have this technology in our portfolio to be a complete networking solution."

Brocade started in the data center, they moved toward the edge with their acquisition of Foundry [Networks], but now they realized the edge is not wired anymore, it's now wireless, and hence their acquisition of Ruckus.

Will this wired-wireless consolidation slow down?

We're going to see more of this, frankly. We're going to get to a point in a couple of years, where we're going to stop making the distinction between wired and wireless networking. You're just going to have edge networking. By and large, it's going to be wireless, and these larger companies that have been large wired providers of edge networking in the past will have to have wireless in their portfolio.

Looking ahead, what is Xirrus' wireless technology road map to keep sales flowing?

There's no end in innovation for Wi-Fi. … We're got a new faster wireless technology coming out every two to three years. We're just going through [802.11].11ac Wave 2 now, [802.11].11ax is coming up, which is even higher speeds – you're starting to talk 10-gigabit per second, plus we have the entire 60 gigahertz band that's just starting to show up and you're getting some vendors like Qualcomm and others starting to support 60 gigahertz.

So the market will be ripe with opportunities to continue to roll out new versions of Wi-Fi, and I think that as the fast, nimble, standalone company -- we'll be the first to those. We always had been.

What about your infrastructure gear at the edge?

We've got some edge infrastructure gear in our portfolio now. We'll continue to expand that as needed, but we're really going to focus on this wireless edge and providing the best performance, best capacity, but also the best manageability. … All that being said, we are seeing this wave of consolidation, so who knows what happens in the next three to five years.