Dell, Aerohive Partnership 'Smells' Like An Acquisition Ahead, Partners Say

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Solution providers said Dell's new strategic technology partnership with Aerohive Networks is foreshadowing a Dell acquisition of the networking vendor.

"It definitely smells like an [Aerohive] acquisition could be coming now -- it makes a whole lot of sense for Dell," said one top executive of an Elite Aerohive and Dell Premier partner, who declined to be named. "Aerohive is a really, really great wireless company. … We see that those are a rare breed now, and most are getting bought by larger companies -- like a Dell."

Brocade Communications revealed plans this month to acquire wireless specialist Ruckus Wireless for an estimated $1.2 billion. Ruckus was just the latest wireless vendor acquired by a larger company over the past year -- among them Aruba Networks, bought for $3 billion by then-Hewlett-Packard, and Meru Networks, bought by security vendor Fortinet for $44 million.

Dell declined to comment on a possible Aerohive acquisition.

In a statement to CRN about a possible acquisition, an Aerohive spokesperson said, "Aerohive continues to partner with strategic wired networking technology providers, such as Dell. This is the continuation of our partnership."

Round Rock, Texas-based Dell has formed a deep strategic technology partnership with Aerohive to offer a software tool that can manage Dell's wired networking switches as well as Aerohive's wireless access points. The two companies are rolling out new cloud-based solutions that integrate and manage wired and wireless infrastructure using Aerohive's HiveManager NG -- the vendor's network management system, which it recently enhanced.

"The acquisition of Aerohive makes sense right now for Dell," said Zeus Kerravala, principal analyst at Westminster, Mass.-based ZK Research. "Wi-Fi is obviously a very important part of every company's digital strategy. With this partnership, Dell has integrated at the management level, so the next phase would be to own the technology ... but right now, Dell's probably got bigger things to think about with EMC pending."

Another top executive from a solution provider that partners with Aerohive said in an email: "The integration does make it more likely to see an acquisition of Aerohive [from Dell]." The executive, who did not wish to be identified, said Aerohive's open HiveManager product and wireless solutions would make it "easy" for Dell to implement Aerohive solutions.

CRN reported earlier this month that partners were already suggesting that Dell might have its eyes on Aerohive for a possible acquisition in order to better compete against HP Aruba.

In April 2015, Dell and Aerohive formed a partnership whereby Dell became a global reseller of Aerohive solutions.

The new enhanced partnership now integrates Dell N-Series switches and HiveManager NG, "to provide the most unified multivendor wired and wireless solution in the industry," said the Aerohive spokesperson.

Partners said Dell could gain more traction in the networking market if they purchased Aerohive.

Dell acquired Force 10 Networks, an Ethernet switch developer vendor, for $700 million in 2011 to expand its market presence in the networking space, although the move has yet to make any major impact on the market.

"Aerohive is relatively cheap, from a capital market perspective, and they've got far better technology than most," said Kerravala. "More and more things are moving to cloud-managed. … Aerohive does that as good as anybody."

Aerohive generated $152 million in revenue for fiscal year 2015, a 10.5 percent increase compared with 2014. Its market capitalization is $288 million.