Ruckus plus Brocade IP division could attract Arris, Cisco, Nokia, others

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Broadcom, Ltd bought Brocade Communications Systems for $5.9 billion, giving the company a strong offering in networking storage business.While Brocade has a broader networking business, under the terms of the deal, Broadcom will divest the IP networking part of the business including Ruckus Wireless, a company Brocade just recently acquired.

Given the rapid converging of wired and wireless networks and the changing economics of operators, it seems to us that anyone from Nokia, which has wide ranging WiFi management interests inherited from Alcatel, and Arris, which has to deal with WiFi every time it installs a home gateway, could become rapidly interested in the property.

The list could become quite extensive. Hewlett-Packard bought Aruba Networks last year, wishing to focus on enterprise WiFi, and might seek a rival specialist which has more experience with arenas and the wider emerging global market, as Ruckus has.

Smaller firms like Ubiquiti Networks, are both US managed, but in the same business, what we might call emerging economy WiFi. In essence, Ruckus offers carrier class WiFi experience, and has many projects around the world in making municipal wireless actually work. That doesn’t really seem the style of companies like Arris or HP, but better with a smaller firm the same or similar size to Ruckus. There are opportunities for cablecos and telcos to secure new revenues from mobile operators, and that means an increasing focus on WiFi.

Nokia’s acquisition of Alcatel-Lucent was driven by convergence. Nokia had made a strategic decision to concentrate only on mo-bile broadband infrastructure, but with integration of fixed and wireless links becoming critical to many customers, ALU brought a valuable portfolio in fixed IP equipment. In 5G, that conver-gence will have to be truly seamless, putting a huge premium on fiber assets.

Other, smaller acquisitions will result from the need for fixed-line and cable operators to have wireless networks, and for MNOs to have both fiber and cable.

Another asset which is also on the table is the IP networking business of Brocade, following its own acqui-sition by chip giant Broadcom, which has already said it will sell off the IP elements, so this could be sold alongside Ruckus Wire-less.

In Arris we see perhaps a more natural fit with this IP side. Its core cableco customers are moving quickly to adopt WiFi First and cellular MVNO deals to support quad play services, it would make sense for Arris – or other cableco suppliers like Cisco or Ju-niper – to snap up Ruckus. Cisco has already got itself out of WiFi by selling off Linksys, but this could be seen more as a services business, than a manufacturer.

Arris CEO Bruce McClelland told the recent Needham & Co Next-Gen Storage/Networking conference that he wants his firm to “become one of the major names in tech going forward” and that wireless would be important to that. He said: “I think wireless is a natural adjacency and there are certainly technologies we have that allow us to grow into that if that becomes a big segment … but when you get into the managed wireless cellular space, there’s a lot of very specialized technology there that we don’t have today so that would be something we’d probably have to go get.”

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Peter has been involved in technology for 35 years, and is now the Lead Analyst at Faultline, a digital media research service offered by Rethink Technology Research. In his work at Faultline Peter has built an understanding of wired and wireless Triple Play and Quad Play models including multiscreen video delivery, taking in all aspects of delivering video files including IPTV. This includes all the various content protection, conditional access and digital rights management, encoding, set tops and VoD server technologies. Peter writes about all forms of video delivery is fascinated with the impact IP is having on all of the entertainment fields, and calls his service Faultline because of the deep faults which can devastate large established companies operating in the fields of consumer electronics, broadcasting, content delivery, content creation, and all forms of telecommunications operators, as content begins to be delivered digitally. Peter is currently advising major players and start up ventures in this field, and has both written and validated business plans in the area.

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