Aruba eyes 20 percent market share, says pipeline robust

By Shrutika Verma

BANGALORE (Reuters) - Aruba Networks (ARUN.O) is targeting more than 20 percent of the wireless local area network market over the next 12 to 24 months as it continues to gain share from market leader Cisco Systems Inc (CSCO.O), its chief financial officer said.

The company has recently won "nearly every deal it competes against Cisco and in some cases Motorola," CFO Steffan Tomlinson said in an interview with Reuters.

In 2008, Aruba's overall sales grew about 27 percent year over year, while Cisco's wireless LAN segment witnessed a growth of 10 percent, according to figures from Dell'Oro Group.

In the first quarter of 2009, Cisco's share of the enterprise wireless LAN segment dropped 3 percentage points to 60 percent, while Aruba's market share grew one percentage point to 8.1 percent, the market research firm said.

Aruba, the No. 2 wireless LAN provider after Cisco, has been winning a string of contracts.

"The deal pipeline has been the largest ever been in the company's history," CFO Tomlinson said.

Aruba recently pipped Cisco to win a deal with a large secondary school district in Australia, he said.

The deal, which is in collaboration with IBM (IBM.N), is a programed implement of secure wireless solution into 463 secondary schools and falls into the company's top 25 customer list, according to Aruba.

In 2005, Aruba bagged a Microsoft contract, which is considered as one of the world's biggest wireless LAN deployments.

Cisco did not directly comment on Aruba's market share gains, but said it maintains its leadership position within the enterprise and consumer wireless LAN markets, Ray Smets, vice president and general manager for Cisco's wireless networking business unit said through an email.

"Cisco has also rapidly taken the leading market share position in 802.11n," he added.

Aruba's latest wi-fi, or WLAN, products use the 802.11n technology, which ensures much faster connectivity than current standards of wireless local area networks. The 802.11n standard up for ratification in November.

Aruba, which gets more than 20 percent of its revenue from non-traditional enterprises such as healthcare and education, is betting on the 802.11n standard -- expected to be a key revenue driver for the company, said Tomlinson.

"Including both Aruba branded products and those produced by Aruba for private label customers, Aruba's total 802.11n revenue garnered a 15.5 percent worldwide market share, and its unit shipments almost a 15 percent market share, placing it second only to Cisco," a Dell'Oro Group report said.

Virginia Union University, Saudi Arabia's King Khalid University Hospital and Washington and Lee University are some of Aruba's recent 802.11n customers.