Wireless market is getting hot. Tanaza is glad to host an article posted on Aerohive Blog, where the CEO David Flynn, explains the impact of Meraki acquisition and the cloud networking trend.
* * *
The Wireless LAN market has seen a lot of action in the past couple of weeks. With Ruckus’ recent IPO and then Meraki’s acquisition, to say the Wi-Fi market is heating up is an understatement. Last Monday’s news of Meraki’s $1.2B purchase by Cisco marks one more ‘feather’ in Cisco’s acquisition cap, further validating the relevance of enterprise wireless networking and especially the power of cloud technology. Clearly cloud networking is the hot new trend in the market, and the recent traction illustrates the importance of cloud-enabling everything from the datacenter to wireless access. All signs point to enterprise networking moving toward the cloud and Aerohive has seen this silver lining all along.
In this Q&A, David Flynn, CEO of Aerohive Networks, weighs in on what Meraki’s acquisition means to Aerohive, its customers, and the channel. Today’s Q&A follows last week’s blog in which David analyzes the Meraki acquisition as an indication of a much more important trend that is a disruption to business – cloud networking.
* * *
Q: Why did Cisco buy Meraki?
A: Cisco wanted to add an SMB focused cloud offering to their product line to expand their product line and improve SMB sales efficiency while minimizing competition with their existing offerings. Meraki’s cloud managed networking solution does a very nice job at improving sales efficiency and reducing customer operating costs – in just the same way that Aerohive’s cloud managed networking solution does. Cloud management streamlines the entire lifecycle for the company and the customer – accelerating evaluation, easing initial deployment, streamlining updates and increasing supportability. It redefines how networks can be deployed. Where things differ between Aerohive and Meraki’s is that Meraki’s cloud management solution is actually a “cloud–dependent” architecture because critical functions require an active connection to the cloud, while Aerohive has 100% survivability even if the connection to the cloud is down. While this “cloud-dependent” architecture is a customer disadvantage, it is actually an advantage for Cisco’s business because it reduces the overlap with Cisco’s existing products. That is because the loss in functionality when disconnected from the cloud, and shallow SMB feature depth, makes it unacceptable to more demanding enterprise IT teams. So Cisco’s traditional customer base will keep buying their more expensive legacy products while Cisco attempts to increase total sales with this new SMB product line.
Q: Did Cisco consider buying Aerohive?
A: While we can’t speak for Cisco, we can say that buying Aerohive would have given them a strong cloud management solution for the mid-market, but at the same time it would have been massively disruptive to Cisco’s existing wireless business because our controller-less architecture, enterprise class feature set and private cloud management solutions compete directly with Cisco’s existing products and would have led to major positioning problems. The Meraki decision is a logical one because it gives them cloud, without forcing them to confront the positioning challenge that an enterprise class controller-less solution would create when sold alongside their legacy controller-based solutions.
Q: What does Meraki’s acquisition mean for Aerohive?
A: Meraki’s acquisition is great news for Aerohive. With this purchase, Cisco has validated the importance of cloud networking and next generation Wi-Fi solutions. Additionally, Meraki’s acquisition takes Meraki out of the picture providing Aerohive with the opportunity to be the first company to go public in the cloud networking / next generation Wi-Fi space.
Q: What does Meraki’s acquisition mean for the Channel?
A: It will take a while for Cisco to integrate the Meraki products into their portfolio, so it is possible no immediate changes will be apparent. In the near future, existing Meraki channel partners may end up playing second fiddle to large, established Cisco channel partners and should expect the large distribution footprint to drive down margins. Aerohive channel partners should feel confident that Aerohive will remain a partner-focused company, and any new partners interested in being a part of the next big thing in networking should talk to their regional Aerohive representatives.