On August 8, 2019, publicly-traded Cambium announced that it had completed the acquisition of the Xirrus products and cloud services from privately-held Riverbed Technology, Inc. Xirrus has been a vendor in the Enterprise WLAN market for a while now and has been associated with its high-performance enterprise-class WLAN products as well as its cloud-managed services. In our research, we find Xirrus has done well in the large venues, the education, government, and retail markets.
We interviewed the team at Cambium today and learned that the company is committed to using channels as a distribution strategy for the combined portfolio. Additionally, the team told us it will be supporting both Cambium WLAN customers as well as Xirrus customers, and that, over time, the products and services will be converged. We think it makes sense to rationalize the products, which will allow future customers to take advantage of developments made at each of the organizations. The team explained that Cambium will be focusing primarily on medium and small-sized customers and that it will not be pursuing large enterprises associated with the Fortune 1000, instance.
The timing of Cambium’s acquisition makes sense on several counts. First, it just completed its Initial Public Offering and is more well-capitalized than when it was a privately-held company. Second, during its IPO, Cambium identified that it expects its exposure to the enterprise market is key to its growth, so getting more exposure here will increase it further. Third, several other companies have acquired enterprise WLAN vendors, and Cambium is part of this greater trend. For instance, Arista Networks completed its acquisition of Mojo Networks in late 2018 and Juniper Networks closed its acquisition of Mist Systems at the end of 1Q19.
Fast-growing Ethernet Switch vendor Arista Networks announced plans to acquire Mojo Networks, an Enterprise-class WLAN vendor today. The deal is expected to close in C3Q18. This deal douses hopes that Arista may buy other WLAN vendors, in our view. Mojo Networks is unique in the WLAN industry: (a) it has a different business model from competitors, and (b) as of Aug 2018, it manages more Enterprise-class Access Points using Artificial Intelligence than other vendors. Arista says that it plans to use Mojo AI in its Cognitive Cloud Networking for Campus initiative.
Mojo Networks has taken revenue for cloud-managed services and has not taken revenue from the sale of Access Points. The Access Points are sold by distributors who make a small margin and drop ship them to Mojo Networks customers. The Mojo Networks revenue from cloud-managed services is significant when compared to other vendors in the Enterprise-class WLAN market. Additionally, because Mojo's Access Point selling partners charge only a small premium for the hardware, Mojo customers benefit with a lower total cost for the Access Points, than, say, Cisco or HPE Aruba Access Points.
We attended the Wi-Fi NOW conference in Redwood City, CA this week and attended some interesting presentations. We are writing about our observations and notes from the Google, Quantenna, Mist Systems and Mojo Networks presentations.
Google Station presentation. "GOOGLE STATION: PUBLIC WI-FI TO CONNECT THE NEXT BILLION INTERNET USERS." Monica Garde and Erika Wool made an interesting presentation. The jist of the presentation, from our viewpoint, is that Google is partnering with service providers and enabling these service providers to monetize the Wi-Fi network through a revenue sharing system that is based primarily upon advertising. The company shared some statistics, which we have in the accompanying slide.
Quantenna presentation. James Chen, VP Product Line Management presented "GREAT INNOVATIONS PART ONE: MASSIVE MIMO & DUAL-BAND 802.11AX". Chen made the the case that 8x8 WiFi (that Quantenna calls Massive MIMO) outperforms 4x4 systems. For instance, in its tests, at 85 RSSI and through a wall, performance was 1.6x greater using 8x8 compared to 4x4. The company also made the case that Massive MIMO has greater throughput compared to non Massive MIMO, as well; the company has demonstrated >1 Gbps throughput in a typical home. The company showed that Massive MIMO alleviates the "Sticky Client" using a 1x1 Samsung Galaxy Tab Active2 device. The company did not talk about 802.11ax, unfortunately, other than to say that 8x8 is relevant for 802.11ax, as well.
Mojo Networks presentation. Mojo CEO Rick Wilmer made the point that simply enabling Cloud-managed Wi-Fi has been done already, implying this is cloud 1.0, and that this message is boring. The company explained that its cloud architecture is cloud 2.0 because it takes advantage of the capabilities in the cloud and enables - Cognitive Wi-Fi. Cognitive Wi-Fi, as far as Mojo is concerned, has to do with big data (store key client parameters and run ML algorithms) and smart edge APs. The company didn't go into deep science of ML/AI, but explained the ML workflow: 1-data collection, 2-training the classifier model, 3-trained model in action, 4-result.
Mojo explained that it has lots of data to perform Machine Learning on. It has 1/2M APs deployed. The company shared that using 1 week of data of a subset across only 4 verticals (enterprise, education, mfg, retail & hospitality): 237K clients, 31M associations, 400+ applications. Separately, the company said it has obtains 50M associations per week (in a press release). A significant amount of the data that is delivered to the cloud has been pre-processed in the Mojo APs; the APs cache 2 days of data. The point of these statistics, according to Mojo, is that it has more data than other Wi-Fi vendors to train its Machine Learning system on.
According to Mojo, using inference engine, automatically fixes everything possible. Wilmer says that this makes interacting with the User Interface less necessary because it takes care of problems automatically. Was Mojo serious or joking when it said, "the UI may disappear as we know it." Time will tell.
The company shared some other information that was interesting:
Mist Systems. Bob Friday, of Mist made a presentation on May 17, 2018. In addition to the content from his presentation, I interviewed other at Mist personnel at the show. The company claims it is focusing and having success in selling to large enterprises. We learned that Mist uses Broadcom WiFi chips and has a custom-designed Bluetooth antennae array (shown at the show). The company highlights its location services as a unique capability, and it draws upon its Bluetooth capabilities to deliver location. However, the company's main message is its AI capabilities; in some ways, it has become the poster-child for AI amongst startups in the networking industry. Mist's presentation at the show reiterated the same point - that it is an AI company.
Stepping back, Mist has been shipping commercially for a year now. In our observation and research, the company's efforts to take share from competitors has landed it on the map - over the past two quarters, its larger competitors have taken notice of Mist and see it competing at large enterprise accounts.
During the Q&A part of the presentation by Bob Friday, Mist CTO and founder was asked something that we found very interesting; the question was what kinds of algorithms does Mist use in its system, and do they all need to learn? The answer was to the effect that many different types of algorithms are used, linear optimization, decision tree analytics, neural networks, etc. Friday made the case that there are just certain things you just know about how a WiFi network will and should work, so why go an have a machine learn about it when you already know it. This begs the question - how necessary is AI in the first place, especially if the vendor and its IT workers or VARs have gobs of experience and can design and implement a Wi-Fi network right in the first place. Looking at the problem differently, what this means is that some vendors may have had different backgrounds than competitors and can design Wi-Fi systems that know how to work under a variety of working conditions. Friday was also asked another question - given that Mist is focusing so much on AI, does this mean that far fewer IT workers will become employed? Bob's answer was diplomatic, but probably true - he said that no, we'll need the same number of workers in the near-term, and that AI Wi-Fi will simply allow the same number of IT workers to make better decisions. Still, the question makes it clear - the audience is concerned about job loss as AI works its way into the IT industry.
The OCP Summit 2018 hit record attendance and we can can summarize the theme as that of continued disaggregation of network/server functions. Examples of demonstrations, presentations and proposals associated with disaggregation are as follows: