1/25/2005 -- Two weeks ago, Cisco Systems Inc. acquired WLAN technology solutions provider Airespace Inc. While technology acquisitions are nothing new for Cisco, analysts say the Airespace purchase is more important than most.

“[T]he acquisition gives Cisco the technology infusion it [needs] to rapidly advance its WLAN solution and expand the breadth of markets that its WLAN offerings can address,” says Joel Conover, a principal analyst for enterprise infrastructure with consultancy Current Analysis. In addition, Conover notes, Cisco’s Airespace coup “conveniently puts a large competitive kink” in the WLAN sales strategies of its major competitors, “forcing them to scramble to deliver an alternative solution or feed revenues directly into Cisco’s coffers.”

The simple upshot, Conover says, is that Airespace catapults Cisco from WLAN also-ran to market leader. “[T]hrough this acquisition, Cisco becomes the dominant supplier of enterprise WLAN solutions, and at the same time puts competitors including Nortel, Alcatel and NEC”—all of which were former Airespace OEM partners—“in the difficult and uncomfortable position of re-thinking their wireless strategy and/or reselling Cisco equipment.”

On balance, Airespace gives Cisco a robust and adaptable WLAN technology platform, along with enough market share to make it the dominant supplier in the space, with about 66 percent combined market share. What’s more, Airespace gives Cisco technology that’s specifically tailored for enterprise customers.

”Airespace provides a technology infusion that will enable Cisco to address the needs of the specific segment of enterprise wireless LAN customers that desire a managed WLAN overlay network,” Conover writes. “Typically, these customers are deploying WLAN solutions in hot spots where the technology drives productivity or new business processes. In contrast to Cisco’s existing solution, the Airespace solution offers a more self-contained solution, and one that doesn’t depend on an existing Catalyst 6500 installation.”

The result, he notes, is a potentially more cost-effective solution that’s also better adapted to a range of potential target markets and customer sizes. After all, many customers perceive Cisco’s existing WLSM/WLSE solution as more expensive and less functional than other WLAN-switch architectures in the market. “Cisco has trailed the market in implementing RF management, mobility and IDS functionality in its WLAN solution,” Conover adds.

In the final analysis, Conover concludes, Airespace is nothing less than a coup for Cisco. “Cisco’s acquisition of Airespace puts Cisco in the driver’s seat for the WLAN market, with a set of solutions that can address the requirements of the majority of customers in the market today,” he says. “Cisco gains valuable technology that will help it grow and defend its position in the market, and gains market share while shutting out competitors. The acquisition eliminates one competitor in the market, but at the same time creates a much stronger competitive threat that remaining competitors will need to respond to with increased vigor and innovation.” -Stephen Swoyer