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Brocade stitches in Wi-Fi with purchase of Ruckus Wireless


via Flickr © Markus Grossalber (CC BY 2.0)

  • Weaving a virtualisation tapestry of NFV and wireless.
  • Focus on 5G, IoT and wireless Internet access
  • A new and effective competitor to the likes of Cisco and HPE
  • "Brocade: A class of richly decorative fabric with a raised surface. Usually made with coloured silks and woven with gold and silver threads." Very Californian.

In an important deal that will give the likes of Cisco and Hewlett Packard Enterprise considerable food for thought, Brocade Communications of San Jose, California is buying Wi-Fi, smart antenna and smart wireless specialist Ruckus Wireless, of nearby Sunnyvale, in a US$1.5 billion cash and shares deal.

Brocade specialises in data and storage networking and designs and makes switches, routers and other networking equipment. It is also a major player in network functions virtualisation (NFV) and software defined networking (SDN) and additionally provides network management software spanning physical and virtual devices.

Brocade is known to be keen to extend its network virtualisation business strategy to encompass wireless connectivity and 5G and the acquisition will help do that because Ruckus builds kit that enables the rapid installation and commissioning of the wireless hotspots that are becoming more ubiquitous and important worldwide with every passing day.  

To work properly, indeed, to work at all, such wireless connections need considerable networking infrastructure in which Ruckus also specialises. Brocade's rivals, Cisco and HPE  have made similar acquisitions. Three years ago Cisco bought Wi-Fi company Maraki for $1.2 billion in cash and, last year, Hewlett Packard spent $3 billion on acquiring Aruba Networks, a networking company selling enterprise wireless LAN and edge access networking equipment.

All three companies, Brocade, Cisco and HPE want to move into the service provider and telecoms markets and are seeking at least to do business with, and preferably and better still, to form partnerships with big cloud players like Google, telcos, large enterprises and government agencies in the US and elsewhere. Indeed, Ruckus already has an established relationship with Google where it is helping the Cookie Monster with cloud-based networking technologies and solutions.

Both Brocade and Ruckus have been focusing for some time now on the virtualisation of networking equipment and the acquisition will help accelerate such virtualisation from the core data centres all the way through to the network edge. Indeed, in a statement Brodcade writes that Ruckus will help hone its strategy for "various edge services, including 5G mobile services, the Internet of Things, smart cities, OpenGtm technology for in-building wireless and LTE/Wi-Fi convergence."

Brocade's CEO, Lloyd Carney, said the acquisition will create "a combined organisation that is more agile and pure play, which will help accelerate product development and innovation."

He added, "This strategic combination will position us to expand our addressable market and technology leadership with Ruckus' fast-growing wireless LAN products, and supports our vision to deliver market-leading New IP solutions that enable the network to become a platform for innovation". Ruckus CEO Selina Lo will retain her position and continue to lead the Ruckus business and will report directly to Lloyd Carney.

Brocade says Ruckus shareholders will get $6.45 per share in cash plus 0.75 shares of Brocade common stock. Prior to the acquisition announcement, and over the past 12 months,  the share price of both Brocade and Ruckus had been on the slide, with Brocade's drifting down by 9.5 per cent and Ruckus's falling by a significant 22 per cent.

As the deal was announced yesterday afternoon in the US, Ruckus stock rose by 32 per cent, while, as the way of things in the topsy turvy world of Wall Street and Silicon Valley , Brocade's share price fell back by 14 per cent. But make no mistake, this is a significant acquisition that will reverberate through the industry and have a marked effect on competition and rivalry as the comms world transforms itself for the age of virtualisation.

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