swot: hewlett packard enterprise (aruba networks), … · swot: hewlett packard enterprise (aruba...
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SWOT:HewlettPackardEnterprise(ArubaNetworks),WiredandWirelessLANAccessInfrastructure,Worldwide
11December2015|ID:G00278171|Analyst(s):ChristianCanales,TimZimmerman
Summary
TheacquisitionofArubaNetworkshasstrengthenedHewlettPackardEnterprise'smarketposition,butstrategicplannersneedtounderstandthatthehighlevelofopportunitieswillrequireproperexecution.Competitorscanrefinetheirgo-to-marketstrategiesbasedonthisSWOTanalysis.
Analysis
SWOTAnalysis
Thisstrength,weakness,opportunityandthreat(SWOT)analysisevaluatestheHewlettPackardEnterprise(ArubaNetwork)strategyfordeveloping,marketinganddeliveringwiredandwirelesslocal-areanetwork(LAN)accessinfrastructuresolutions.ThismarketconsistsofvendorsthatsupplywiredandwirelessLAN(WLAN)hardwareandsoftwarecomponentsthatprovidedeviceconnectivitytotheenterpriseinfrastructureaccesslayer.Thesecomponentsinclude:
• Hardware—wirelessaccesspoints(APs)andwiredswitches.• Softwarenetworkapplications—includingnetworkmanagement,guestaccess,onboarding,authentication,
authorizationandaccounting(AAA)security,policyenforcement,intrusiondetectionsystem(IDS)/wirelessIDS(WIDS),locationservices,networkperformancemonitoring(NPM),andapplicationprofilingandanalytics.
ThewritingofthisresearchcomesatatimeofmajorchangeswithinthelargerHewlettPackardorganization.Effectivesincethestartofitsfiscalyear,1November2015,Hewlett-PackardCompany(HP)hasseparatedintotwoindependentpubliclytradedcompanies"HPInc."and"HewlettPackardEnterprise."HewlettPackardEnterprisewillcomprisenetworking,servers,storage,cloudcomputing,unifiedcommunicationsandenterpriseservicesandsoftware,whereasHPInc.willmanagethePCandprinterbusiness.
Inthenetworkingmarketplace,HewlettPackard'sacquisitionofArubaNetworks(Aruba)(completedinMay2015)offersastrongaccesslayersolutionportfolio,butexecutionisparamount—giventhesizeoftheacquisition.Arubahadapproximately1,800employeesand,accordingtoourestimatesin2014,thecompanygenerated$650millioninproductrevenuefromsalesofLANaccesslayerproducts,predominantlyWLAN.ThecombinationoftheNo.2WLANvendorwiththeNo.2Ethernetswitchvendor(intermsofrevenueshare,andaccordingtoGartner'spublishedmarketsharereports,fortheenterprisenetworkequipmentmarket)establishesHPE(Aruba)wellintheglobalaccesslayermarketagainstthemarketleaderCiscoSystems(Cisco).
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StrategicplannerscanuseouranalysistostrengthenHPE(Aruba)'spositioningintheaccesslayermarketasthecompanycapitalizesonmarketopportunities.StrategicplannersfromcompetitorscanuseouranalysistobetterunderstandHPE(Aruba)'sweaknessesandthreats,torefinetheirgo-to-marketapproaches.
NomenclatureUsedinThisSWOT
SinceHewlettPackardandArubaNetworkswereverydifferentcompaniespriortotheacquisition,inthisresearchwehaveusedthefollowingnomenclature:
• "HP"forlegacyHewlettPackard(HP)NetworkingWLANproducts• "Aruba"forlegacyArubaNetworks• "HPE"forreferencestothenewentity(HewlettPackardEnterprise,whichincludesArubaNetworks)
Figure1providesagraphicalproportionaterepresentationofthestrengths,weaknesses,opportunitiesandthreatsofHPEwiredandwirelessaccessinfrastructurebusiness,basedonGartner'sSWOTratingmodel.ThiscomparativerepresentationoftheSWOTanalysisforHPEaddsrelativeweightingstoeachoftheSWOTelementsaspartofproducingthegraphicalresults.ThesizeofeachboxreflectstherelativesignificanceofHPE'sSWOT.
Figure1.GraphicalRepresentationofSWOT:HewlettPackardEnterprise,WiredandWirelessLANAccessInfrastructure,Worldwide
LAN=local-areanetwork;SWOT=strength,weakness,opportunityandthreat
Source:Gartner(December2015)
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Figure2liststhecontributingfactors,providingalistofHPE'skeystrengths,weaknesses,opportunitiesandthreatsinthemarket.Figure2summarizestheindividualSWOTfindings.Figure2.SWOT:HewlettPackardEnterprise,WiredandWirelessLANAccessInfrastructure,Worldwide
H3C=H3CTechnologies;HPE=HewlettPackardEnterprise;LAN=local-areanetwork;R&D=researchanddevelopment;SDN=software-definednetwork;SMB=smallormidsizebusiness;SWOT=strength,weakness,opportunityandthreat;WLAN=wirelessLAN
Source:Gartner(December2015)
Strengths
StrongAccessLayerSolutionThroughArubaAcquisition
HPbegantoenhanceitsportfolioofWLANofferingsviatheacquisitionofColubrisNetworks(Colubris)(4Q08)and,later,throughtheacquisitionof3Com(2Q10).Colubriswaspredominantlyasmallormidsizebusiness(SMB)solutionwithastrongsecurityfocus,and3Comwasawell-establishedvendorinChinathroughitsH3CTechnologies(H3C)subsidiary.WhiletheseacquisitionshelpedHPtobecomeatop-fiveWLANvendor(inrevenueranking,accordingtoGartner'spublishedmarketsharereports),HPhasstruggledthroughouttheyearstokeeppacewiththemarket,losingrevenueshareduring2013and2014,withchannelpartnersgrowingmorefrustrated.Theissueswerealackofmarketfocusand
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differentiation,aswellasabroad,disjointedportfolio,basedonacquisitionsthatwerenotrationalizedtomeetHP'stargetmarketsorofferaclearcontinuumofproductsacrossHP'scustomertargets.TheacquisitionofArubaNetworkswasaboldmovebyHPE,inordertostrengthenaWLANofferingthathadlostitscompetitiveedge.Thiswaspredominantlyduetoalackofacost-effectivecontrollerlessofferingaswellasitsgapsinitsnetworkapplicationservicesportfolio(forexample,deviceonboardingandguestaccess).ArubahadbeentheNo.2playersince2007(intermsofrevenueshare,accordingtoourenterpriseWLANmarketsharestatistics).Thisisbecauseofitsbroadoffering—drivenbyinnovation,increasinglysoftware-drivenandbasedonastrongunifiedaccessenforcementpolicy—appealingtonearlyallnetworkdesigntypesandpricepoints.Aruba'sexecutivemanagementteamwasnotableforitsremarkablejobofrecognizingwhichsegmentsweregrowingandthenmovingthecompanytomaximizeitsrevenuepotential.
Strong,unifiedwired/wirelessintegrationandinnovativenetworkapplicationsareincreasinglyrequiredbyenterprises;ArubaprovidesastrongsolutionwithitsClearPassaccessmanagementproductsuiteandAirWavenetworkmanagement.Theseincludemultivendorsupport,whichblendswellwithHPEswitchesaswellasenterprisesthathavedeployedothervendors'accesscomponents—includingCisco.
StrongNetworkManagementandGuestAccessSolution
ArubahasblendeditsAvendaSystemsandAmigopodacquisitionsintotheClearPasssuite,oneoftheleadingguestaccess,policyenforcementandonboardingsolutionsinthemarket.HPEisnowinpossessionofarobustsolutionthatcanimplementgranularaccessprivilegesbasedonusers'roles,devicetype,devicehealthandlocation.Thisallowstheapplicationtocontroltheaccesspolicyofendusersconnectingtoawiredorwirelessnetworkbasedontheirlogincredentials.ThekeyenablerfortheClearPasssuiteofapplicationshasbeentheabilitytoprovideenterpriseswithfunctionalityacrossdifferentpricepointstoaddressabroadmixofmarketsandcustomertypes.Forexample,inthesmallandmediumenterprisemarket,organizationsmayneedguestaccess,inadditiontothephysicalwiredand/orwirelessconnectivity.ClearPassGuestoffersthiscapability,whereasmostcompetitorshavethisfunctionalitybundledintosinglemonolithicsecurity,policyenforcement,configurationmanagement,intrusiondetection,RemoteAuthenticationDial-InUserService(RADIUS)serverapplication.
Aruba'sClearPasssuiteofapplicationswasincludedinGartner's2014"MagicQuadrantforNetworkAccessControl,"inthe"Leaders"quadrant(togetherwithCiscoandForeScoutTechnologies).ARADIUS-basedsolution,ClearPass'strengthsincludeintegrationwiththird-partysecuritysolutions(securityinformationandeventmanagement[SIEM],enterprisemobilitymanagement[EMM]andnext-generationfirewalls),astrongbringyourowndevice(BYOD)EMMstrategythroughitsintegrationwithAirWatch,MobileIronandseveralotherEMMsolutions,aswellasgranularguestnetworkapplicationfunctionality.WhileClearPasssaleshavehistoricallybeenprimarilydrivenbywirelessrollouts(andrarelyseeninwiredLANenvironments),HPE'sacquisitionwillbroadentheopportunity.
HPEhasnotyetmergedAruba'sAirWaveanditsIntelligentManagementCenter(IMC)networkmanagementapplication,butstepswillbetakentodoso.GartnerexpectsanysurvivingfunctionalityofthemonolithicandoftencumbersomeIMC,aswellasaseparateIMCSmartConnectapplication,tobewovenintotheAirWaveaccesslayerplatform.TheIMCbrandandcapabilitiesneededfordatacenter(DC)managementmayalsobespunoffintoaDC-centricsolution,withtheabilityforAirWaveandanewIMCtoprovideanenterprisesolutionwherethespecificapplicationcanfocusontheenterpriseneedsofeachnetworksegment.
LargeNetworkingPortfolio
HPEhasabroadnetworkingportfoliothatincludesswitches,WLANandrouters,unmatchedinbreadthandfunctionalityintheaccesslayermarket(exceptingCisco),butatamorecompetitivepricepoint.Inanincreasinglycommoditizedmarketofaccesslayerhardware,HPEhasbeenabletocapitalizebasedonitslower-pricedaccesslayerswitches(incomparisonwithCisco).
Followingonfromthe2009launchofProCurveOpenNetworkEcosystem(ONE)Alliance,HPEcombinedthisallianceprogramwiththeprogramsfrom3Com/H3CandTippingPointinearly2010tocreateanewprogramcalledHPAllianceOnePartnerProgram.ThisprogramaimsforpartnershipswithvendorproductsdevelopedtoworkwithHP
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Networking.VendorsthatarepartofthisprogramincludeAeroScout,AirTightNetworks,Avaya,F5Networks,Fortinet,IntelSecurityGroup,MicrosoftLyncandRiverbedTechnology.Inaddition,HPEswitchescanbebundledasanoptionwithotherofferingsfromitsalliancepartners.ThisenablesHPEtoofferanend-to-endportfoliotocompetewithCiscoforthoseenterprisesthatpreferasimple"one-stop-shop,"whilemaintaininga"best-of-breed"approachtoinfrastructuredesign.
LifetimeWarranty
AveryimportantsellingpointforHPEcontinuestobetheprovidingofalifetimewarrantyonmanyofitsproducts,withnextbusinessdayadvancedshipmentinmostcountries.HPEhasbeenapioneerhere,andeventhoughothernetworkingvendorsofferasimilarwarrantyonpartoftheirproductlines,today,HPEcontinuestobealeader,coveringallcriticalcomponents,suchaspowersuppliesandfans.In3Q13,HPElauncheditsLifetimeWarranty2.0program,whichofferscustomersfree24/7technicalsupportforthreeyearsonanyHPFlexCampus,FlexBranchorsmallbusinessproduct.Thisprogramappliestoawideselectionofswitches—including5500HI,5500EI,5120EI,3800,3600EI,3500/3500yl,2915,2910al,2620,2615,2530,2520and2510switchseriesforaccesslayerandbranchnetworks.ForWLAN,freesupportappliestotheMSMControllerSeries,830/870UnifiedWired-WLANApplianceseriesandtheMSM-802.11nAccessPointseries.
GlobalSalesCoverageandSupport
HPEhasabroadnetworkofdistributionchannelsandisabletoreachoutandaddressnetworkmarketdemandonawiderscalethanitscompetitors(withtheexceptionofCisco).Ithastheabilitytoofferacompetitivelypricedaccesslayerofferingwithequivalentfunctionalityacrossallgeographies,soHPEiswellpositionedtoseizemarketsharefromCisco(althoughproperfocusedexecutionwillberequired).Additionally,thishasopenedupcross-sellingopportunitiesaswellasaccesstonewcustomerswithinthevariousmarketsHPEbusinessaddresses,particularlylargeenterpriseaccounts,wherethenewaccesslayersolutioncanbedeployedglobally.
FootprintandAbilitytoPenetratetheSMBMarket
ArubaInstanthasenjoyedstrongcustomeradoptionthroughtheintegrationofmeshnetworkingwithintheaccesspoints.ThiseliminatestheneedtodeployaWLANhardwarecontroller,appealingtotheprice-consciousmarketofSMBs.HPEhasachievedgoodpenetrationamongSMBsintheswitchmarketandtheArubaacquisitionhasbroadenedthisopportunitytoWLAN.HPEneedstocontinuetoinvestinArubaCentral,itscloudmanagementoffering,sothatitcanprovideequivalentfunctionalitytotheClearPasssuiteofapplicationsandAirWave.Failuretocreatethisparitywillleavethegrowingcloudmanagednetworkandinfrastructure-as-a-service(IaaS)marketswideopentoCisco'sMerakisolution,aswellasofferingsthatcontinuetobelaunchedbyothercompetitors.HPE'swiredswitcheshaveastrongfootprintintheSMBmarket,particularlyinEMEAandAsia/Pacific,whichneedstobeaggressivelyleveraged.WeexpectHPEtomakepartsofitsswitchingportfoliocloud-manageablewithinthenextninemonths.ThisisanareawhereHPEcanenjoyabetterexperiencethanCisco.WithAruba,thesamehardwarecanbemigratedfromcloudtoon-premisesmanagement,butwithMerakithisisnotpossible.
Weaknesses
BroadWLANPortfolioNeedsSimplifying
FollowingtheacquisitionofAruba,weexpectHPEtobeginrationalizingcertainproductlinesinthenearfuture,tosimplifyselectionforcustomers.Thisisanecessarymeasure,particularlyforWLAN,toeliminateproductfunctionalityoverlapinitsbroadportfolio,andisthereasonwhythishasbeenflaggedasaweakness.Arubaswitchesandlegacy"HP"APsrepresentproductredundancies—andthusarenotthelong-termstrategicplatformsforHPE.Whileeventualdiscontinuationoftheseproductlineshasthepotentialfordisruptiontoexistingcustomers,webelievethereisagreaterbenefittoberealizedbytherationalizationofHPE'sWLANportfolio.
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Productoverlapwillpotentiallyconfusecustomers,particularlywhenlittleproductdifferentiationexists.Inresponsetothe"unifiedwired/wireless"productannouncementsmadebyCiscoearlyin2013withitsCatalyst3850Seriesswitches,HPintroducedits830UnifiedWired-WLANSwitchSeriesthatsameyear,butcompetingcontrollerlesssolutionssuchasArubaInstanthaveenjoyedhighercustomeradoption.TheHPunifiedwired-WLANmoduleforthe10500and7500seriesswitchisexpensivetodeploysinceitrequiresachassisswitch.Moreover,accessswitcheshavevastlymovedawayfromchassisdesignstofixedconfiguration.CustomeradoptionofCisco'sWirelessServicesModule2(WiSM2)hasbeenlimited,ashasHP's10500/7500unifiedwired-WLANmodule.Inlate2014,HPreleaseditsM220802.11nAPseries,whichusesaclusteringtechnologythatenablesSMBstodeployandmanageupto16APsasasingleentity.TheM220overlapswithArubaInstant,buthaslessfunctionality,justifyinganeventualneedtoretirethisproduct.HPEhasacloud-managedWLANproduct,basedonamanagementinterfacecalledCloudNetworkManager(CNM)andthe350,355and365cloud-managedAPs,whichoverlapsinfunctionalitywithArubaCentral.
AccessLayerSolutionNeedsBetter"Stickiness"
TheissueofproductfunctionalityoverlapwithinHPE'saccesslayerportfoliocreatesaholeinthe"stickiness"betweenitsWLANandswitchofferings.Wehavegivenalowweightingtothisweakness,sincesolutionssuchasAirWaveandClearPassofferdifferentiation,butwebelievethereisroomforimprovementtodelivermoreadvancedwired/wirelessintegrationcapabilities.TheabilitytobuildonthisstickinesswillprovideHPEwiththemeanstogainacompetitiveadvantageagainstCisco.Accesslayerswitchesrepresentamaturemarketthathasnotperceivedmuchinnovationinthepastfewyears.Networkapplicationscanprovidethe"glue"requiredinordertoestablishapremiumforfunctionality,aswellaseliminateanaccesslayerpricewar.
LacksaStrongNetworkingBrandWithinLargeEnterprises
Whiletheaccesslayerhasbecomeacommoditizedspace,manyvendorshavehistoricallystruggledintheirabilitytodisplaceCiscobasedonpricing.Oneofthereasonsisthatmanynetworkadministrators,intheirvendorselection,continuetoviewtheentirenetwork(access,aggregationandcorelayers)asoneentity.ThishugelybenefitsCisco,becauseoftheperceivedsafetyofa"onestopshop"fromastrongglobalbrandalongwiththerecognizablevalueofCiscotrainingandcertifications.HPEneedstoadoptastrongerapproachtowardleveragingitsbrandintheenterprisemarket,tobeabletoachievesuccesswhencompetingagainstthebrand"pull"thatCiscoenjoys.TheHPEcompanyspinoffshouldhelpinthisaspect,eventhoughshort-termmarketinginvestmentswilllikelybelimitedduetotheplannedcostcutting.
ArubaCentralHasSomeFunctionalityGaps
HPE'srecentadditionofClearPassguestaccessfunctionalityhascontributedtomakingArubaCentralamorecompletecloudWLANsolution.Forconnectivityredundancy,intheeventoflosingtheWANconnectiontothecloud,ArubaInstantAPscanreverttocluster(on-premises)mode.However,Cisco'sMerakicontinuestoboastseveralstrengthsinfunctionality,includingindustry-leadingdeviceprofiling,aswellassubscription-basedcloudapplicationsthatincludebasictrafficshaping,WANoptimizationandcontentfiltering.ThismeansthatArubaCentralislackinginsomefunctionalityincomparisonwithCiscoMeraki.
Cloud-managedWLANsarebecomingarequiredelementamongenterprisebuyers,andthesubscriptionmodelofsoftware-as-a-serviceblendswellwiththeincreasingavailabilityofmanagedWLANservices.Enterprisesarelookingforvendorstoprovideanequivalentfunctionalitysolutionthatcanbedeployedon-premisesaswellasinapublicorprivatecloud,butoftenexamineasingleimplementationcapabilityforasingleusecase.
Opportunities
MultivendorDeploymentsDuetoCommoditizationofAccessLayerSwitches
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Whilewehadclassifiedthisasathreatin"SWOT:Cisco,WiredandWirelessLANAccessInfrastructure,Worldwide,"weseecommoditizationasanopportunityforHPE.IncreasedcommoditizationofaccesslayerswitchesprobesCisco'sabilitytochargehigherpricepremiums,andinreturn,favorscheaperproductsthatoffersimilarlevelsoffunctionality.WhilefearofinteroperabilitybetweenCiscoandothervendors'equipmentoftencompelscustomerstoavoidlookingatothervendorsforreplacements,multivendornetworkswillcontinuetogrowasaresultofincreasedcommoditization.Accesslayerswitchesrepresentamaturemarketthathasnotseenmuchinnovationinthepastfewyears.TechnologiessuchasPoweroverEthernetPlus(PoE+),virtualstackinginfixedconfigurationswitches,andimprovedpowerconsumptionnolongerofferdifferentiation.Therefore,lowerpricepointsincreasinglyplayanimportantrole.Refreshprojecttimingalsoaffectstheprocurementprocess,whichwhencoupledwithincreasedcommoditization,stimulatesadoptionofmultivendornetworks.Thisisbecausethepurchasingdecisionfortheaccesslayercomponents(wiredandwireless)isoftenmadeatdifferenttimesandsometimesbydifferentpartsoftheenterprise.
IncreasingDemandofNetworkApplicationServices
Physicaltechnologies,suchas802.11nand802.11acWave1,havebecomecommoditizedattheaccesslayer,andthiscommoditizationhasincreasedtheusefullifeofequipment.Thismakessellingoverlaynetworkservices(suchascontext-awareandlocation-basedservices,security,andBYODsupport)acrosstheentirenetworkforwiredandwirelessconnectivitymoreimportant.Deploymentofnetworkapplicationservices,suchasnetworkmanagement,securityauthenticationandauthorization,andpolicyenforcement,willcontinuetobedrivenbyenterprisesseekingefficient,secureandpredictablebehaviorfromtheirnetwork.Gartnerisalreadyhearingclientsaskforthenextstepintheaccesslayermarket—SLAsforwiredandwirelesscommunications.
HPEiswellpositionedintheaccesslayermarkettotakeadvantageofthegrowingbuyerdemandforperformancearoundclientbandwidthrequirementsalongwithend-to-endmonitoringofthenetwork,aswellasproactiveanddynamicchangestothenetworktomaintainSLAs.TheabilitytoenforcetheseSLAsacrossdata,voiceandvideomeansmonitoringtoolsmustprovidefeedbackonbandwidthandlatencyacrosstheend-to-endnetwork.
ProductssuchasClearPassandAirWaveofferdifferentiationandareeasiertouseoverlegacyHPequivalents.TheArubaacquisitionmakesHPEaleadingproviderinapartofthemarketthatisgrowingfast,andwheredemandwillcontinuetobestrong.Thereisalsoaneedinthemarketformanagedservices;however,withoutmonitoringtoolsandtheabilitytoproactivelyaddressissues,managedserviceproviders'partnerswillbeunabletomeetthemarketrequirements.
LocationAssetsviaMeridianAcquisition
WehaveclassifiedHPE'spositionintheWLANlocationservicesspaceasanopportunitybecauseimplementationoflocation-basedWLANsolutions—whilenicheinthecarpetedenterprisespace—isgrowinginverticalssuchasretailandhealthcare,itwillbedrivenfurtherastheuptakeofInternetofThings(IoT)continues.Today,WLANlocationingisfillingagapwhereGPS-basedorcellularsolutionsdon'tfunctionaswell,whichisindoorsandincomplexurbanenvironments.Itallowsenterprisestoanalyzemovementanddeliverhigherlevelsofbusinessvaluebyusingthisdataforcontext.GPSsatelliteandmobilenetworksignaltriangulationofferlessubiquityandprecision,renderingtheirusesuboptimalwhencomparedwithWLANlocationservicestoenrichmobileappsandotherworkflows.Wi-Fisignalscantriangulatethepositionofawirelessdeviceindoorsratheraccurately.InasimilarveintotheacquisitionsofThinkSmartTechnologiesbyCiscoandofYFindTechnologiesbyRuckusWireless,ArubaacquiredMeridianAppsin2013,aimedatintegratingMeridian'sWLANlocationingsolutionforsmartphonesandtablets.Meridian'ssoftwaretargetspublic-facingverticals,suchascasinos,malls,stores,transporthubs,conventioncentersandmuseums,tohelpcustomersnavigatelargeindoorfacilitieswithcustommobileapplicationsthatprovidedirectionsandpointsofinterest.Fortheenterprise,informationcanbegatheredaboutusers'travelpatternsandpreferences,aswellasassetlocations,whichcanbeusedtodelivercontext-awarenessadvertising,forinstance.
Cloud-ManagedWLANs
ThecombinationofHPE'spresenceamongSMBsintheEthernetswitchmarketwithAruba'sacquisitionhaswidenedtheopportunityforcloud-managedWLANs,whicharegainingmarkettraction.Weestimatethatcloud-managedWLANsare
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growingthreetimesfasterthantraditionalofferings.CloudisappropriatefororganizationswithlimitedITstaffandbudgetaryconstraintsasitpresentsanoptionforrapidactivationofremotebranches,particularlyforSMBs.Cloudcanoffermoreflexibledeploymentandmanagementoptions,especiallyinmultisiteormultitenantdeployments.ServiceprovidershaveembracedtheideaofbeingabletocustomizewirelesshotspotsandrelatedservicesviaasingleWeb-basedinterfaceformultiplesites—withouthavingtobuilddatacenters,deployon-siteWLANcontrollersandsoforth.CloudWLANsareflexibleinscalability,anelementofparticularimportancetomanagedservicesproviders.Venueownerswhodeliverpublicwirelessaccesswelcometheideaofnoadditionalcapitalexpenditure(capex)beyondtheinstallationoftheAPs,freeingupinvestmentforothervalue-addedapplicationslikeanalyticsandlocation-basedservices.
GeographicalExpansion
HPE'sacquisitionofArubapresentsanopportunityforgeographicalexpansion,fromthebenefitofamorerobustwired/wirelessLANaccesslayeroffering.Accordingtoourestimates,switchrevenuefromNorthAmericaforHPE'skeycompetitorscontinuestoconstitutethebulkoftheglobalnumber(morethan45%forDellandmorethan50%forCiscoandJuniperNetworks).Incomparison,NorthAmericarepresents20%to25%ofHPE'sworldwideswitchrevenue.Historically,thebulkofAruba'srevenueoriginatedfromNorthAmerica,presentinganopportunityforHPEtogrowitsbusinessinthisregion.Similarly,givenAsia/PacificandEMEAhaveeachrepresentedmorethan30%ofHPE'sglobalswitchrevenue,historically,thisopensupanopportunityforanincreasedWLANfootprintintheseregions.
PublicVenue/ServiceProviderWLANOpportunity
ThisisanareawhereAruba,historically,lackedtraction,andwhenthismarketwasgrowingstrongly,Arubamissedoutonrevenuegrowth.WehaveclassifiedthisasanopportunitybecauseHPEhastherightproductstobecomealeadingplayerinthismarket,especiallywiththemovetomoresoftware-orientedproductsandtheMeridianacquisition.Inordertosucceed,HPEneedstosimplifyAruba'spricingstructurethathas,todate,beenheavilybasedonsoftwarelicenses,makingitssolutiontooexpensiveincomparisonwithRuckusWirelessandHuaweiTechnologies.Aruba'sHybridControlarchitecturewasacomprehensivemove,butultimatelythelackofstrongpartnershipswithcommunicationsserviceproviders(CSPs)meanttractionwasmissing.HybridControltargetsserviceproviderstoofferprivateWi-FiformanagedservicesandpublicWi-Fiforcellularoffload.ThisarchitectureispartlybasedonusingtheArubacontrollerlessInstantaccesspointstooffloadtrafficlocally,whilecentralizingmoreimportanttraffic—suchasbilling—tothe7200SeriesMobilityControllers,deployedinthecore.Arubaclaimsthatthisarchitecturecanscaletomorethan100,000accesspoints.
SoftwareDefinedNetworkImplementationinWired/WirelessLANAccessInfrastructure
ArubahascompletedinteroperabilitytestingwithpartnersAlcatel-LucentEnterprise,AristaNetworks,BrocadeandJuniperNetworks,aimedatimplementingsoftware-definednetwork(SDN)supportacrosswiredandwirelessproducts.ThesetestsincludedtheintegrationofArubaedgeproductswithothervendors'SDNaggregation/coreswitches,orwithothervendors'networkmanagementsolutionsembeddedwithSDNsupport.Incampusenvironments,SDNpresentsanopportunitytosimplifynetworkdesigns,increaseend-to-endapplicationperformanceandvisibility,andeliminatemanualintervention.SDNsupportpermitsnetworkadministratorstocraftwiredandwirelesstrafficforwardingpoliciestooptimizenetworkpaths,maximizeavailablebandwidth,lowerlatencyandeliminatespanningtrees.DynamicSDNtopologiesimplyphysicalandlogicalLevel2/Level3topologiesarelessrelevant.UnifiedmanagementmakesiteasierforITtosupportacommonpolicyframeworkacrosstheentirenetwork.
WhileSDNimplementationattheedgeofthenetworkremainsveryembryonic,asorganizationsbegintoembracethearchitecturaladvantagesthatSDNcanoffer,thiswindowofopportunitywillbecomemoretangible.ThebreadthoftheHPEAllianceOnePartnerProgramcontinuestoprovideopportunitiesforfurthertestingandproductdevelopment.
InnovativeCommercialSolutions
Weclassifythisasanopportunitybecauseintheswitchmarket,somevendorshavestartedtoexplorewaysofofferingmoreflexibleandinnovativecommercialsolutions,whichaddsdifferentiationasanalternativetoCisco.Launchedin
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4Q12,HP'sFlexNetworkUtilityAdvantageProgramisanEthernetswitchrentalmodelbasedonequipmentusage,whichfororganizationscanoffertheadvantageofaligningnetworkingcostswithactualconsumption.Enterprisesarebilledonamonthlybasis,commencingoncetheyreceivetheequipment,withHPEretainingownership.HPE'sofferingispredominantlytargetedatdeliverythroughpartnershipswithCSPs.Customerscanuseports(activate/deactivate)basedonspecifictermsandagreementswiththeirCSP.Forthetargetedlargeenterprisesandgovernmentorganizations,thekeywillbesavingsoncapitalexpenditure,aswellasgreaterflexibilityinaligningnetworkcapacitywithchangingbusinessneeds.
SaleofMajorityStakeinH3C
In2Q15,HPEannouncedthataTsinghuaHoldingssubsidiary,Unisplendour,agreedtoacquire51%stakeinanewbusinesscalled"H3C,"comprisingH3CTechnologiesandHP'sChina-basedserver,storageandtechnologyservicebusinesses.Thedealisexpectedtobefinalizedinthenextthreemonths.MajorityownershipbyaChineseentitywillhelpHPEsoftenthenationalistinfluencethatcannegativelyaffectnon-Chinesevendors.Wearealreadywitnessingforeignvendorsbeingsidelinedincriticalnationalinfrastructureprocurements,includinggovernment,healthcare,education,manufacturing,transportationandutilityindustries.Formoreinformation,see"GeopoliticalIssuesPushHPtoForgoControlofDataCenterNetworkingPortfolio."
Threats
NeedtoRationalizeProductSupportWarranty
HPE'sacquisitionofArubacreatesacollisionbetweenHPE'slifetimewarrantyandAruba'shigher-pricedmaintenanceoffering.Historically,Arubahassupportedafeature-licensedsalesmodelforitsAPs,whichcan"undermine"itsaggressivehardwarepricesagainstcompetitorsthathaveasimplerpricingmodelstructure.Aruba'spricingmodelinregardtonetworkmanagementincludespayingforanAPmanagementlicenseforthecontroller,aswellasalicenseforAirWave.Value-addedsecurityfunctionality(suchaspolicyenforcementfirewallandwirelessintrusionprotection)isalsochargedthroughmodulelicensesbasedonthenumberofsupportedAPs.
HPEhasyettorevealspecificdetailstoGartneraboutthepossibilityofimplementingawarrantypolicyacrosstheformerArubaportfolio—tomirrorthelifetimewarrantyavailableacrossmostofHPEaccesslayerswitches.WeexpectHPEtobeginimplementingarationalizedwarrantypolicyforArubaoverthenextthreetosixmonths,butremaincautiousabouttheextentofthischange,aswerecognizethatHPEwillsacrificeamajorrevenuestreambydoingthis.Failuretomaintainthisimportantsellingfeaturewillleadtothedangerofbuyerspullingthepiecesapart(wiredandwirelesscomponents)andseekingthelowestprice,potentiallyshiftingtoadifferentvendorthatcanprovidepartofthesolution.
Cisco'sAdvantage—SellingtoEnterprisesThatWanttoBuyTheirAccessLayerSolutionFromaSingleVendor
WehavegivenalowweightingtothisthreataswehaverecognizedthestrengthofHPE'send-to-endnetworkportfolio.ThecaveathereisthatbuyingfromthesamevendorwilleventuallyfavorCiscomorethananyothercompany,simplyduetoCisco'sstronglocalpresence,controlofdistributionchannelsandloyalcustomerbase.Thereisalsoanerroneousperceptionthatbuyingfromthesamevendordeliversbetterintegratedwiredandwirelessnetworkmanagement.Thisisnottrue,asthetechnicalcapabilitiesofaccesslayertoolstodayallowenterprisestomanagethenetworkcomponentsofmultiplevendors.InGartner'slatestMagicQuadrantsurveyregardingenterprises'accesslayersolution,75%ofenterprisesreportedthattheypreferredbuyingtheirentireaccesslayersolutionfromasinglevendor.Nevertheless,multivendorrolloutsarediminishingthisadvantageforCisco.Thesamesurveyalsoindicatedthatlessthan50%ofthoseorganizationswereabletobuyfromthesamevendor,eitherbecausetheirpreferredswitchingvendorlackedtheWLANfunctionalityneeded,orbecausetheirpreferredWLANvendordidnotofferaccesslayerswitchingoronethatsuitedtheirneeds.
HPEOwnershipHampersAruba'sAggressiveApproachtoInnovation
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ItisimportantthatHPE'sownershipdoesnothinderAruba'saggressiveapproachtoproductinnovationanditsabilitytoseeknewmarketopportunities.WerecognizethatArubahashistoricallyproducedmanyindustry"firsts,"andforthisreason,wehavegivenalowweightingtothisthreat.Weperceiveapotentialpitfallbasedontheoutcomesofrecentmarketconsolidation(HPE-Aruba,AlliedTelesis-Extricom,Fortinet-MeruNetworks)thathasresultedinWLANvendorsbecomingsubsumedintopredominantlywiredvendors.ThisconsolidationhasledtocontroloftheWLANmarkethavinglargelyshiftedtotwovendors,CiscoandHPE.BothwillarguablycontinuetoprotecttheirrespectiveEthernetswitchbusinessesagainstcannibalizationbyWLAN,oneofthereasonswhytheconceptofthe"all-wirelessoffice,"whileatrendin"greenfield"deployments,hasnotacceleratedasaggressivelyasonewouldhaveassumedafewyearsago.
CompetitionFromCiscointheSMBandCloud-SolutionMarket
Cisco'sacquisitionofMerakihasbeensuccessfulsofar,eventhoughthesplitbetweenAironetandCiscoMerakiproductscontinuetocreatemarketconfusion.Meraki'srevenuegrewfromapproximately$15millionperquarterin2012(asperourmarketshareestimates),to$75millionto$100millionperquarterby2015.ThisestimateincludesrecurringrevenuefromcloudsubscriptionsandswitchesinadditiontonewWLANopportunities.CiscoMerakiresonateswellwithSMBmobilityneeds,eventhoughsomeofthecurrentgrowthcomesfromreplacementsofHybridRemoteEdgeAccessPoint(H-REAP),OfficeExtendandotherweakattemptsataddressingthehometeleworkingandSMBenvironmentsbyCisco.
ArubaInstanthasbeenwellreceivedintheSMBspace,butrecently(inSeptember2015),CiscolaunchedanAPthatofferssimilarfunctionality,aWave2802.11acAP,thatdeliversatotalaggregatedual-radiodatarateofupto1Gbps(theoretically).TargetedatSMBs,withtheCiscoAironet1830Series,anAPcanactasacontrollerinagroupof25APs.CiscoMerakialsoeliminatestheneedtodeployacontroller,butinsteadrequiresthepurchaseofacloud-managementsoftwarelicense.TheCiscoAironet1830APSerieslaunchbroadenstheSMB-relevantproductsofferedacrossproductlines.
ReducedControlofR&DandPlantAssetsinChina
Wehavegivenalowweightingtothisthreat,sincetheH3CacquisitionbyUnisplendourwillaffectthedatacenterswitchbusinessmoreheavilythancampusswitchingandWLAN.However,webelieveitisnecessarytonotethatthe51%ownershipsaleofH3CmeansthatinChina,HPEwillhavelessinfluenceovertheday-to-dayoperationsandR&DofH3C.HPEcouldhistoricallycountonstrongR&DandplantassetsinChina,butwillnolongerbethemajoritystakeholder,potentiallymissingoutontheabilitytodriveproductdevelopmentforthecompany.ThemovetoexertownershipovertheChinesevendorisbelievedbyGartnertohavebeenpartlyfocusedonloweringproductdevelopmentcosts.
RecommendationsforPartnersand/orCompetitors
• Competitorsneedtocontinuedevelopingmultivendorsupportforcampus/accesslayernetworkmanagement,guestaccessandpolicyenforcementtoolsinordertoremainrelevantinbuyerconversations.Strongproductintegrationprovidesamigrationpathforexistinginstalledcomponentsandmeanstodisplacecompetitors.
• Cloud-managednetworksprovidesanopportunityforemergingtechnologyproviderstoaccostandsurpassestablishedonesbyleveragingnewmodelstobetteralignwithSMBrequirements.Thekeywillbetoshiftfromlowestpricetototalcostofownership(TCO)andprovidehigh-qualitysupport.
• WLANresellersandimplementersshouldnotpromoteprojectsbasedonlegacyHPWLANproducts,andinstead,movetowardtheArubaproductfamily.InstalledWLANscontinuetosufferduetoalackofunderstandingoftheend-userexperienceneededtooptimizebusinessapplicationproductivity.ItisimportantthatWLANresellersandimplementerscontinuetolookbeyondvendorinstallationpracticesandprioritizeend-users'desiredperformancelevel.
• PartnersneedtoconfirmhowHPEplanstoleveragecross-sellingHPEandArubawired/wirelessopportunitieswithexistingaccounts.ItisimportanttoclearlyarticulatedifferentiationbetweenHPEandAruba'sproductsandserviceswiththoseofleadingcompetitors.
ImplicationforCompanyBeingProfiled
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Historically,thelackofcontinuitybetweenHPE'saccesslayerswitchesandtheWLANoffering(derivedfromtheColubrisacquisition)resultedinHPEfallingbehindthemarketintermsoffunctionalityandvisionrequiredforitstargetmarkets.TheArubaacquisitionwasneededtokeepHPEcompetitiveintheaccesslayermarket.Asaresult,HPEneedstoensureappropriateinvestmentsaremadetokeepArubacompetitive,byunderstandingthesegmentationoftheaccesslayerandthenetworkserviceapplicationsthatwillcontinuetodifferentiateaswellasunifythecombinedAruba/HPEsolution.Thenewentitywillneedtorationalizeitsproducts,servicesandtoolstosuccessfullyexecutetheintegrationofArubawithinitsend-to-endaccesslayervision.ThemanagementteamneedstocontinuetorecognizethattheaccesslayerrevenueopportunityisinClearPass(guestaccess,policy,onboarding),AirWave(networkmanagement),Meridian(locationservices)RFProtect(wirelessintrusionprotection)andmultivendorsupport,alongwithotherapplicationsthatextendacrosstheentireproductline,allowingthemtogainmarketsharefromfragmentedorsmallercompetitors.
Evenwiththebestproductline,channeltrainingisoneofthehighestpriorities.TheHPEchannelwillallowtheArubaproductlinetoreachgeographicallocationsthatAruba,asaseparatecompany,wouldnothavehadaccessto—butareeasilyaccessiblebyCisco.Thiswillhelpchannelstoswitchfromabox-pushingmentalitytodeliveringentiresolutions,composedofhardware,softwareandservices.TheempowermentofthechannelwillpotentiallyallowthenewHPEtogainmarketshareinthesegeographies.
Inordertoexpanditstargetavailablemarket,architecturallyHPEneedstoinvestinabettercloud-basedsolutiontospecificallyaddressthepartofthemarket(typicallySMBs)thatcontinuestomovetothecloud.TheArubaCentralsolutiondoesnothavethefunctionalityofAruba'sexistingon-premisessolutionsandthiscontinuestoleavethispartofthemarketavailableforcompetitivesolutions.
CompanyOverview
Table1.HewlettPackardEnterprise(Aruba):KeyFacts
Company HewlettPackardEnterprise(Aruba)
Headquarters 3,000HanoverStreet,PaloAlto,California,94304-1112U.S.A.
PresidentandCEO MegWhitman
CompanyDivisions • EnterpriseGroup(servers,storage,networking,consultingandsupport)
• EnterpriseServices• SoftwareandFinancialServices
ExecutiveVicePresidentandGeneralManagerofEnterpriseGroup
AntonioNeri
TotalNumberofEmployees 252,000
Website www.hp.com
www.hp.com/hpnext
Source:Gartner(December2015)
DominicOrrispresidentatAruba.Inhisrole,Mr.OrroverseesthecombinedHPENetworkingandArubaNetworksbusinessesacrossdatacenter,enterpriseandSMBdivisions.
Methodology
ThevendoranalyzedinthisSWOTwasselectedbecause,followingitsacquisitionofArubaNetworksinMay2015,HewlettPackardEnterpriseisthelargestglobalproviderofenterprisewiredandwirelessLANaccessinfrastructure—afterCisco.GartnerleveragedavarietyofmaterialstodevelopthisSWOTanalysis,including:
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• Analystexpertise• GartnerdataonenterpriseWLANequipmentandcampusEthernetswitches• ExistingGartnerresearchontheWLAN,switchingandnetworkingmarket,includingend-usersurveysandcase
studies• Secondarysources,suchasmediaandfinancialreports• Ongoingdialoguewiththevendor
TheGartnerVendorSWOTanalysisisdesignedfortheuseofprovidersaswellasindividualsinstrategicplanning,marketingandcompetitiveanalysisrolesasasupplementtotheirplanningprocesses.Itsprimaryvalueisasanindependentanalysisoftheprovider'scompetitivesituation.
TheSWOTanalysisprovidesauniqueindependentviewofthestrengths,weaknesses,opportunitiesandthreatsforaspecificpartofaprovider'sbusinessinaspecificmarketandgeography.
AcronymKeyandGlossaryTerms
AAA authentication,authorizationandaccounting
AP accesspoint
Aruba legacyArubaNetworks
BYOD bringyourowndevice
capex capitalexpenditure
CEO chiefexecutiveofficer
CNM CloudNetworkManager(HP)
CSP communicationsserviceprovider
DC datacenter
EMEA Europe,theMiddleEastandAfrica
EMM enterprisemobilitymanagement
Gbps gigabitspersecond
GPS GlobalPositioningSystem
H3C H3CTechnologies
HP legacyHewlettPackard
HPE HewlettPackardEnterprise,forreferencestothenewentity(HewlettPackardEnterprise,whichincludesArubaNetworks)
H-REAPHybridRemoteEdgeAccessPoint(Cisco)
IaaS infrastructure-as-a-service
IDS intrusiondetectionsystem
IMC IntelligentManagementCenter(HP)
IoT InternetofThings
LAN local-areanetwork
NPM networkperformancemonitoring
ONE OpenNetworkEcosystem(HP)
PoE+ PoweroverEthernetPlus
R&D researchanddevelopment
RADIUSRemoteAuthenticationDial-InUserService
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SDN software-definednetwork
SIEM securityinformationandeventmanagement
SLA service-levelagreement
SMB smallormidsizebusiness
SWOT strength,weakness,opportunityandthreat
TCO totalcostofownership
WIDS wirelessintrusiondetectionsystem
Wi-Fi WirelessFidelity
WIPS wirelessintrusionprotectionsystem
WLAN wirelessLAN
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