WIFI upstarts fight for advantage over heavyweights

From: San Jose Mercury News - San Jose,CA,USA - Feb 9, 2004

By Jon Fortt Mercury News

Don LeBeau's sales vision propelled Cisco Systems from a mid-tier player to the leading provider of Internet equipment a decade ago. Now he's trying to repeat the performance as chief executive of Aruba Networks, a scrappy start-up selling wireless gear to large companies.

This time though, it's Cisco that LeBeau is trying to outplay. And he's also got nearly a dozen small competitors to outlast.

In situations like this, upstarts like San Jose-based Aruba resemble nothing so much as a crop of ''Survivor: All-Stars'' contestants -- veteran risk takers who know that only one or two will make it as stand-alone companies. And it will take all the experience and energy of experienced leaders like LeBeau and his contemporaries to change the mindset of potential customers and outwit larger rivals.

The idea LeBeau is selling this time is a WiFi switch -- a smarter corporate version of the home wireless computer network, which controls security and other functions from a central computer. Several companies are clamoring for attention in this field. Aruba today is announcing two large buyers: e-commerce company Ariba, which has 200 active users, and Dartmouth College, which plans to add 1,000 access points to its campus.

Meanwhile, San Jose rival Airespace is announcing an installation at Gallaudet University in Washington, D.C. And Proxim, a Sunnyvale wireless-networking leader, said it plans to jump into the fray with a WiFi switching product that will ship next quarter.

''My speculation is one or maybe two at the most will survive, I would think -- and I think that there's still a chance for maybe one or two to get bought up,'' said Aaron Vance, analyst at Synergy Research Group in Arizona. ''There's talk of Nokia entering the market, and if they're going to do that it will be through acquisition.''

'The incumbents'

Complicating matters are players like Cisco, Symbol Technologies and Nortel Networks, which the start-ups ominously call ''the incumbents.'' Their power lies in the fact that they not only have big sales forces and marketing budgets, but they also have sales and distribution relationships with big customers.

Overcoming that advantage is not easy. The strategy the young companies are using could come from the same playbook: Get a top-level executive who is a name brand in the networking business (AirFlow and Legra Systems also tapped veterans). Scramble to form distribution and reseller relationships with the incumbents and integrators.

And perhaps most important, convince the world that the biggest companies are doing it wrong.

''Changing that perception is one of the critical requirements for our growth,'' LeBeau said. ''This is the same sort of problem I faced in the early '90s. Everybody had a stronger position than the company I was with, called Cisco.''

The last part is made tougher by the fact that in times like these when the economy is barely showing signs of a recovery, large companies tend to buy new equipment from names they trust, if they buy at all.

Market traction

''It's all about who's making the most traction in the marketplace,'' said Alan Cohen, vice president of marketing at Airespace. Deals like the one with Gallaudet University, which grow over time, can provide that traction. ''That account started with nine buildings and grew to 32,'' Cohen said.

Brad Noblet, director of technical services at Dartmouth, said the school's wireless network has grown quickly from being a convenience to ''the mission-critical network.'' The school has a vision for providing many services over a single data network, and that has begun to play out in small ways.

About 100 people use the school's existing wireless network to make voice calls to each other, using software and equipment from Cupertino-based Vocera. And through a partnership with Boston-based Newbury Networks, Dartmouth is experimenting in an engineering building with pushing different information to people, depending on where they are in a room. For example, walk into a classroom and get an agenda for the session -- walk over to lab equipment and get details on what's available for use.

Noblet said he went with Aruba because its technology fit the school's needs, and because Aruba was willing to make adjustments where necessary. He acknowledged that strong competitors have arrived since, though he is still very comfortable with Dartmouth's decision.

''At the time that we looked at it, Aruba was the clear player in this market,'' Noblet said. ''The other folks just weren't as far down the path.''

Contact Jon Fortt at jfortt@mercurynews.com or (408) 278-3489.

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