Ruckus CEO Reaffirms Priorities
For Ruckus Wireless partners wondering what the company’s future looks like, Arris CEO Bruce McClelland has an answer. “It will look more like it did as Ruckus.”
Ruckus Wireless was acquired by Brocade Communications Systems in May for $1.2 billion. In November, semiconductor maker Broadcom struck a deal to buy Brocade for $5.9 billion – but immediately signaled its intention to divest the company’s IP networking business,  including Ruckus. That put Ruckus, a channel favorite, in a sort of limbo.
This week Arris International, a major networking equipment manufacturer, took a significant step toward ending that limbo by announcing a deal to buy Ruckus Wireless and Brocade’s ICX Switch product line for $800 million.
The Arris acquisition of Ruckus is set to be completed at the same time Broadcom executes its buyout of Brocade – sometime in Broadcom’s third fiscal quarter, ending July 31. It might be several months or more before some questions about the acquisition and Ruckus’ future are answered. But Arris CEO McClelland and Ruckus COO Dan Rabinovitsj, in separate interviews with CRN, said this week’s announcement should end the uncertainty that has ruffled the Ruckus partner community since the Broadcom–Brocade deal was disclosed.
”We understand how important channel relationships are in this business and that we have to invest in it, we have to nurture it, and we have to make it an extension of our business,” McClelland said. Details are still scarce. But the plan is to operate Ruckus Wireless and the Brocade ICX Switch product line as a “dedicated business unit” operating relatively independently within Arris and focusing on enterprise wireless networking and wired switching implementations.
Arris “is really setting us up to be a standalone business,” Rabinovitsj said. “This is exactly what we wanted for an outcome. This just takes all the concerns off the table.”
Ruckus channel partners complained that the uncertainty created by Broadcom’s announcement made potential customers skittish and halted some sales deals in their tracks. Some partners said they were holding off making additional investments in Ruckus and competitors in the wireless space reportedly launched efforts to recruit Ruckus partners.
”The limbo is over,” acknowledged Gary Berzack, CTO and COO of New York based eTribeca, a wireless solution and Ruckus partner who has done hundreds of Ruckus implementations. “Any news like this should be welcomed. Not knowing just erodes customer confidence.”
McClelland and Rabinovitsj both emphasized the lack of overlap in the Arris and Ruckus target markets and go to market strategies. About 85 to 90 percent of Arris’ networking gear is sold through giant service providers for consumer use with another 10 percent sold through a few channel companies to smaller service providers.
Ruckus, in contrast, sells almost exclusively through the channel with partners selling and implementing the company’s WiFi systems within large businesses and organizations – about 70 percent of Ruckus’ business – with the rest installed in sports and entertainment venues, hotels and other hospitality establishments, and in “smart city” projects.
Arris, in fact, is already a distributor of Ruckus products.
Ruckus and the Brocade ICX Switch line, collectively known within Brocade as the “network edge” product line, have 10,000 active channel partners, according to Rabinovitsj.
”This is a classic portfolio play,” Rabinovitsj said of the acquisition, saying Arris is looking for ways to expand its business with new products into new markets. “We’ll be the only company out there that has that kind of [product] breadth.”
And the Ruckus channel presence is a significant part of that. Arris “is counting on that to grow and grow at a faster clip,” Rabinovitsj said.
McClelland echoed that thought, saying Arris does not have “the enhanced skill set” to expand into the enterprise business and citywide networks that Ruckus has. “I just think that’s where the puck is going,” he said, in a nod to the famous Wayne Gretzky quote.
One example: As much as 80 percent of mobile wireless traffic is actually inside of buildings. So McClelland sees opportunities for Arris and Ruckus to help business customers improve and expand their wireless systems by linking their cellular LTE wireless systems with service provider networks. “That’s where we come in, that’s our strength,” he said of Arris.
Berzack, at eTribeca, sees an opportunity for the combined companies to white label a subset of Ruckus products for consumer implementations. And there could be opportunities for the Arris and Ruckus operations to leverage each other’s patents and intellectual property.
While Rabinovitsj will head up the Ruckus business unit and report to McClelland, the two executives declined to say anything more about the unit’s management and personnel – including any potential role for popular Brocade channel chief Sandra Glaser Cheek, who was with Ruckus before the Brocade acquisition.
McClelland said the Ruckus product development and management teams would stay independent, although they might collaborate with Arris’ product development operations. Otherwise, he said, “We don’t envision smashing” the two businesses together.
”It will look more like it did as Ruckus,” the Arris CEO said. “It will become our key thrust around the enterprise segment.”
Given the lengthy timeframe before the acquisition is completed, Berzack said he’d like to see Arris and Ruckus provide partners with a more detailed roadmap of what the new organization will look like.
”I’d like to see true commitment and messaging to the channel as soon as possible,” he said. Berzack also expressed surprise at the $800 million price tag, given that Brocade paid $1.2 billion for Ruckus less than a year ago and the Arris acquisition includes the Brocade ICX Switch line. “We don’t have the details,” he said of the deal’s finances.