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Thoughts on the HP/Aruba Acquisition

Estimated reading time: 6 minutes, 5 seconds. Contains 1218 words

I've made no secret of my apprehension at the HP/Aruba Networks acquisition talks. It was due mostly to the history of HP acquisitions over the last 10-15 years. I'm sure most people in networking are familiar so I won't list them. But, a simple Google search should give you all the info you need.

The news leaked the week before Aruba Networks' annual Airheads conference in Las Vegas called Atmosphere 2015. I was considering not coming and was vocal about it on Twitter. So, it was with only modest surprised when I arrived at the conference only to find that my reservation had been cancelled. I was pretty vocal about my distaste for the merger and as much so about the possibility of me not coming. So, I can't blame them for assuming that would be the case. I was straightened out rather quickly with little difficulty so it's really more of an amusing anecdote than anything else.

That said, I was not sure what to expect at this years Atmosphere. How would the announcement be made? Well, as it turned out, like this:

I have to admit that was NOT something I wanted to see. Very reminiscent of the Steve Jobs and Bill Gates version of this back in the 90s well Microsoft was investing millions in Apple. It certainly did not give me an warm fuzzies to see the Giant-Size "Big Brother" version of Meg Whitman over a teeny-tiny Orr. 

But, despite that uncomfortable introduction to the HP acquisition I will say that Dominic did make me feel better. I trust him, but I'm concerned about the HP end of the equation, "He with the most gold rules." HPs got the gold. Of course, Aruba cannot disclose much about the deal. First, it has only just been announced and it will be months before it can close. Second, the deal has to pass regulatory mustard, there will be negotiations as to how the deal will be structured, and what Aruba's management role will be. There isn't much to glean from the statements made, but they did post an announcement on their Web site. The interesting bits to me are:

 

"Together, HP and Aruba will deliver converged wired and wireless solutions, leveraging the strong Aruba brand."

 

LOTS of speculation here. Does this mean that Aruba MAS switching line will remain, or that it's technology will be implemented into HPs existing products, or that HPs switching will now become Aruba's switching line? 

I can see the benefit of bringing Aruba's technology to the wired edge. The MAS product line has not gotten a lot of traction in the market and adding that to the HP line may be seen as a good thing. But, Procurve has a solid brand already (especially in K-12), and they already have the no. 2 spot behind Cisco. So, this is going to be tricky if it happens at all.

 

"The new combined organization will be led by Aruba Networks CEO Dominic Orr and co-founder Keerti Melkote."
 
"After the transaction closes, Aruba will combine with the HP Networking business within HP’s Enterprise Group organization, led by Dominic Orr and Keerti Melkote."

 

So, is this actually saying that HPs networking business will be folded into a newly acquired Aruba? Will HP Networking's management be replaced by Aruba's management? I would love this to be true. I don't trust HP to manage this group into success, but I do trust Dominic and Keerti. If this actually happens - Aruba maintains their brand and will now be responsible for HPs networking division - then I have reason to hope.

Andrew Von Nagy made a good comment at Tech Field Day during the Aruba conference about Meg Whitman's (HP CEO) history with eBay/Paypal and her leaving each unit independent. So, will they really leverage Aruba's brand and expertise and let them run it as they see fit? That is the question at hand and it will take several years before we know the answer.

 

"HP will retain Aruba’s strong culture, including the Airheads Community, specialized sales focus on mobility solutions, and innovative development team."

 

To me, this is the biggest issue. Having the right technology is important, but having a team, and more importantly, a culture, that can execute the vision along with the technology is equally if not more important. HP does not inspire trust with their record of acquisitions in the 2000s. The HP "lifer" mentality is still alive and kicking and HP has not been known for real innovation in a while.

I don't know of an instance - other that Steve Jobs and NeXT - of an acquired company changing the culture of the larger company. They have the money, the actual numbers (300k, or so, at last count), and an entrenched culture of lifers that could make this difficult. The fact that they specifically mentioned Aruba's culture and community is cause for hope, but words are just words until it actually happens.

Aruba has also been an active participant and voice in the wireless community. They have non-Aruba bloggers post on their Airheads Community, and often reach across the aisle without hesitation. Will this also continue? Again, it will take a few years before we know the outcome.

 

"We will be able to significantly increase investments in demand generation across segments."

 

And here is the biggest perceived benefit to Aruba to come out of the acquisition: money. Aruba is just about an $800 million dollar company, whereas HP is in the $20 billion dollar+ club. Those are some deep pockets that could potentially help Aruba compete head-on with Cisco - their largest rival and the current market leader.

This would allow Aruba to scale and invest in R&D, perhaps even going as far as allowing Aruba to design their own custom silicon as does Cisco. HPs presence in the enterprise is another opportunity for Aruba to increase their customer base and reach.

But, this could also be a drawback. The catch-22 of being a large company - it gives you deep pockets to take advantage of opportunities, but at the same time slows you down via the inevitable bureaucracy that is introduced. Only a good, strong, and focused management team can help alleviate that.

MY TAKE?

I am officially, completely, 100% "cautiously optimistic". I can't help, but be slightly apprehensive about HP buying Aruba. No one familiar with this space can honestly say that HP has not botched acquisition after acquisition in the last 15 years. For every successful one there are three, or four that were disastrous. The revolving door of CEOs also makes me question their ability to not interfere with Aruba's success, or simply lose interest.

That said, I trust Dominic and Keerti. I believe they only want Aruba to be the most successful company it can be. If HP can stay out of their way, and let them and their team manage the newly created division as they see fit, I believe we'll see great things in the coming years. If they squander this opportunity and try to change Aruba to do it the "HP way" then I have no hesitation in saying I think they're doomed.

I want these guys to win. I want to see an Aruba that is the leader in it's space and keeps innovating with their products. 

I want to believe.

Don't screw this up HP.