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Cisco Acquires Airespace: Shaking Up Enterprise Wi-Fi

The Mobile Observer

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It will be interesting to see what kind of pricing model Cisco decides
on for this new "smart-everywhere" architecture. The company has
historically charged a significant premium for its well-engineered APs.
Vendors like Airespace, Aruba, Trapeze and Symbol have priced their APs
as giveaways, making most of their profits on high-priced network
controllers and software. The combination of premium-priced APs and
high-cost controllers could force IT managers to modify their financial
models for rolling wireless out enterprisewide. They won't want to do
this, so Cisco will feel some pressure to lower prices.

Market forces will also play a key role in future system pricing. Before
this acquisition, Cisco was already the dominant force in enterprise
Wi-Fi, and many pundits have long proclaimed it "their market to lose."
While Cisco's near-50-percent enterprise wireless market share makes it
the clear leader, much of that market was soft--so soft that a number of
high-profile, loyal Cisco Ethernet customers (Microsoft is rumored to be
amongst them) were jumping ship for wireless solutions from Airespace,
Aruba, Trapeze and others. One senior IT architect from a major
financial services company and a large Cisco customer told me that he
felt Airespace had acquired the position of thought leadership in the
enterprise Wi-Fi market. Ouch.

Now those "on-the-fence" customers are much more likely to remain loyal
to Cisco for wireless. Aruba is now elevated to the mantle of "most
credible alternative to Cisco" in the enterprise, because of both its
technical innovations and its market success. When I recently asked
Aruba co-founder and VP of marketing Kerrti Melkote what percentage of
the 200-plus enterprise customers they touted were Cisco shops, his
response was "almost all of them." Now, when Aruba competes in Cisco
shops, it will compete against Cisco's name and Airespace's marketing
and technology. That will be tough.

There is reason to wish success upon Aruba, Trapeze, Symbol, Meru,
Proxim, Colubris, Nortel, 3Com, Extreme and any other competitive
alternatives to Cisco. Cisco, which has a record of working outside the
IEEE to define its own proprietary standards (LEAP for security, CCX for
more advanced capabilities), needs competition, not only to keep it
honestly engaged in industry standards efforts but also to encourage
continued innovation. A fat, happy Cisco could be bad news for everyone.

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