Wireless switch start-ups are jubilant as Cisco has confirmed plans to buy wireless LAN switch vendor Airespace for $450 million in stock. The move "legitimises" the centralised approach of Airespace and its competitors to managing office WLANs, against the more distributed approach that Cisco has taken so far. It also heralds more consolidation as it leaves Airespace's current partners in a quandary (Read our analysis of the long term results of Cisco's purchase).

The deal - which follows weeks of speculation that Cisco was shopping for a WLAN switch vendor - gives Cisco a secure WLAN switch for small and mid-size businesses. The gear offers an alternative to Cisco's market-leading Aironet wireless product line, and its Structured Wireless-Aware Network (SWAN) architecture (read our explanation of SWAN, which is aimed at very large networks).

Under the terms of the agreement, Cisco will pay approximately $450 million in stock and assumed options for Airespace. The deal, which is pending an anti-trust review by the US Department of Justice, is expected to close by the end of April.

Cisco said it will continue to market and support its Aironet and SWAN WLAN gear, in addition to taking on the existing Airespace customers. Airespace, founded in 2001, will become part of Cisco's Data Center, Switching and Wireless Technology Group, headed by senior vice president Luca Cafiero.

Airespace's products centralise the management and features of WLANs on switches that control multiple "thin" access points (APs), which are basically 802.11 radios with minimal features, and are generally less expensive to deploy and easier to manage and secure, WLAN switch vendors say. Airespace products can also extend advanced features, such as roaming and security, down to other low-cost, third party WLAN APs.

Airespace's products include the Airespace 4000 WLAN Switch, as well as APs and software for managing APs, WLAN authentication, radio frequency configuration and fast, uninterrupted connection handoffs for WLAN clients roaming between access points.

"Cisco has been in a kind of transition," with its WLAN architecture direction, says Aaron Vance, an analyst with Synergy Research Group. "Lately, they've tried to look more like the WLAN switching startup."

Last May, Cisco released a product package that included a module for the Catalyst 6500 switch that centralises management and control of Aironet APs and provides fast roaming and security features. But this package, with a price tag starting at over $50,000, is geared more towards very large deployments with hundreds of Cisco APs and an extensive Cisco LAN.

"With Airespace's products, you can get a functional WLAN system for under $10,000," says David Newman, president of Network Test, a Network World Test Alliance partner. "This will be more appealing to smaller customers, or to (non-Catalyst 6500) users."

Cisco's Airespace buy is also a thumb in the eye for competitors Alcatel, NEC and Nortel Networks. These vendors all recently announced OEM partnerships to re-sell Airespace's kit in combination WLAN/VoIP packages for business networks, using each vendor's respective IP PBX gear, along with Airespace equipment, and Wi-Fi VoIP handsets from Spectralink.

The future of these partnerships is now in doubt, as Cisco competes directly with Alcatel, NEC and Nortel in the IP PBX and LAN switch markets. Synergy's Vance says the Airespace deal could be a harbinger to more WLAN switch market consolidation. "There's definitely a possibility of more consolidation, given that Airespace's large partners - Nortel, Alcatel and NEC - are now left out in the cold."

Want more? Read our analysis of the long term results of Cisco's purchase.