Wi-Fi vendor Aruba Networks has bought into the great outdoors, buying mesh network specialist Azalea Networks for $40.5 million (£28 million).
The deal comprises $27 million in stock and $13.5 million in cash over two years for a small company – Azalea’s current turnover if only $5 million – started ive years ago by two Chinese-American Stanford graduates.
Azalea Networks has several things that Aruba clearly wants, starting with core routing technology that can successfully handle latency-sensitive applications such as video over multi-hop outdoor mesh networks. This increasingly matters in a range of industrial niches that want access to realtime visual data.
Market segments include petrochemicals, oil and gas, mining, and any industrial application that needs such data in locations that are too inaccessible for wires.
A second attraction is that Azalea has a strong foothold in China, a key market for such mesh industrial wireless systems. Finally – and one must never rule this out when dealing with the ultra-competitive Aruba – Azalea is claimed to be the top-selling mesh provider in China, outselling arch-rival Cisco.
Aruba will integrate Azalea’s 100 engineer development centre in Beijing into its operation while keeping the startup’s current CEO, Frank Wang. The Chinese team is no doubt incentivised by the structuring of the deal as some cash and a lot of Aruba stock, which will tie them into the fold.
“This is not a mesh metro system,” said Aruba’s UK marketing director, Roger Hockaday, underlining that Aruba sees mesh as an industrial technology for now. He estimated the current global market for the technology as being around the $200 million mark.