Hewlett-Packard Co. yesterday confirmed rumors it wants to buy out Aruba Networks Inc., announcing it would acquire the company later this year in a deal worth almost $3 billion. The acquisition has been approved by the board of directors at both companies and means Aruba will be absorbed into the HP Enterprise Group led by Antonio Neri.

The deal comes ahead of HP’s long-awaited split into two distinct entities – HP Inc., which will sell PCs and printers, and HP Enterprise, which will focus on selling hardware, software and services for the enterprise. That split is still a few months away, and with the Aruba deal set to close in the second half of this year, it’s likely to take place at around the same time as the restructuring is finalized.

Most analysts are bullish on the deal, and the consensus is it’ll work out well for both companies and their customers. Speaking to the Wall Street Journal, analysts from Cantor Fitzgerald said the merger would benefit both parties, even though they believe HP would be better off spending its cash on Big Data and cloud technologies instead of wireless networking.

Writing in Network World, Zeus Kerravala said the merger is “a solid “win-win” for both vendors” and should prove to be much more important than HP’s previous acquisitions of wireless firms 3Com and Colubris. Whereas those purchases were more about gaining good technology, with Aruba it gets all that and more.

“It’s buying a great company and all that comes with it: technology, marketing, go-to-market, and people,” Kerravala wrote. “Together, HP and Aruba can deliver a complete networking portfolio – from the data center all the way to the wireless edge.”

HP’s wireless woes

HP desperately needs it, because even though it holds the No. 2 position in wired networking market share, it’s never really managed to get its wireless business going in a market that’s saturated with low-cost Wi-Fi suppliers.

“Take a look at what they are doing in wireless. Does anything stand out? How many HP wireless customers do you know of?” commented tech blogger Matthew Norwood, who is a channel partner of Aruba, HP and Cisco.

Norwood said HP’s failure to light up the wireless world has nothing to do with its technology, which has always been sound, but rather its failure to get the word out.

“In my mind, their wireless marketing is non-existent,” he writes. “You never see them out there. You never hear about them. Wireless companies with much smaller market share and marketing dollars are out there spreading their message constantly.”

That shouldn’t be HP’s problem any longer with Aruba in its grasp. That’s because HP’s buying a great company that not only has good technology, but also everything that goes with it – marketing, go-to-market and people.

Even better, HP plans to keep the Aruba brand and management team that made it so successful in the first place. Aruba just announced its Q2 2015 financial results, recording revenues of $208 million for the first quarter, a 29 percent year-on-year rise. Its current CEO Dominic Orr will lead the newly combined organizations, while Aruba’s CTO Keerti Melkote, who Kerravala describes as “the architect of Aruba’s success” will also stay on.

Pressure on Cisco?

For Charles King, principal analyst at Pund-IT, Inc., the deal is a clear infrastructure play by HP, which he believes desperately needs a wireless strategy if it’s to challenge its biggest rival Cisco Systems, Inc., in the wider networking world.

“They’re pitching this as a combination of Aruba wireless and HP back-end switching,” said King to Information Week. “Aruba is considered to be the second largest player in the mobile space, and by combining with HP the two will be in a better position to take on market leader Cisco.”

It’s a message that was reinforced by Stu Miniman, Principal Research Contributor at Wikibon, who noted that HP’s new SVP of Mergers & Acquisitions Tom Joyce probably had a hand in the deal. Miniman said Aruba’s world-class WLAN technology would add much to what is already a very strong HP Networking portfolio.

“Mobility is one of the big mega-trends that enterprise IT is grappling with and Aruba has built a strong brand with solid growth,” he said. “The merger will give HP even more credibility and a new reason to engage with IT.”

Not everyone sees it that way, though. A number of Cisco partners argued the move simply highlights how far HP is trailing behind its main competitor in the wireless stakes. Gerry Baron, CMO at Cisco partner Cirrity LLC, told CRN.com that he didn’t see how HP could surpass Cisco’s own wireless offerings, even with Aruba in its clutches.

“It will remain to be seen what HP actually does with that acquisition, whereas we feel really confident that we bet on the right horse for who we’re using,” Baron said.

Tom Clancy, founding partner at New York-based Cisco partner Valiant Communications Ltd., echoed those thoughts, telling CRN.com that HP was simply trying to play catch up with Cisco, and is unlikely to threaten its rival in the near-term. He pointed to Cisco’s acquisition of Meraki, LLC in December 2012 as a much more prescient move, and said a response from HP was long overdue.

“I think that HP is kind of just playing a ‘me too’ role in that capacity,” Clancy said.

If HP’s main goal is just to catch up with Cisco, then Aruba’s technology and knowhow will certainly come in useful. The startup has built a well-deserved reputation for its ability to innovate quickly and adapt to changes in the wireless market, but some observers are concerned that HP could stifle this kind of creativity. HP’s recent track record isn’t encouraging. The company has botched a number of acquisitions in recent years, the most famous being the $10.3 billion acquisition of Autonomy in 2011 that led to an $8.8 billion write-off a year later.

That’s the biggest concern for Eric Hawley, chief information officer at Aruba customer Utah State University. Hawley told TechTarget that HP was buying Aruba because it’s unable to build the same kind of innovative wireless technology on its own, but once the company has been fully absorbed, Aruba might lose focus on innovation.

“I do believe that once a company is largely only able to innovate through acquisition, the innovators they acquire suffer and innovation slows,” he said.

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