Plugging in to Explosive Demands
Alabama’s largest IT company makes a strategic acquisition to exploit the explosion in Internet capacity demand.
Gary Bolton, Vice President for Global Marketing, Adtran
In early August, Huntsville’s Adtran Inc. completed the acquisition of a high-speed network solutions provider that could give Alabama’s largest IT company a major advance in the rapidly expanding demand for Internet connectivity.
As the number of users and demand for bandwidth has exploded, the race to keep pace with new technology that is “scalable” to the need has led to cloud computing—which moves networks away from individual controllers to central managers in the virtual sky. And in the wireless domain, the technological momentum has been with IEEE 802.11n—an international networking standard, adopted in 2009, that boosts maximum raw data rates from 54 Mbit/s to 600 Mbit/s.
The company that Adtran bought—Massachusetts-based Bluesocket Inc.—is a pacesetter in both of those IT trends, having applied cloud computing to 802.11n. Bluesocket is on the cutting edge of vWLAN—the virtualization, through cloud computing, of wireless local area networks.
The acquisition is a new growth strategy for Adtran, a network hardware provider that had previously relied largely on internal growth. It gives Adtran new depth in the WLAN field, alongside Adtran’s previous focus on wire-based network hardware.
Terms of the Bluesocket acquisition have not been released.
Gary Bolton, Adtran’s vice president for global marketing, talked with us about the Bluesocket deal shortly after it was announced.
Adtran was the 8th largest non-financial, publicly traded company headquartered in Alabama in 2010, with sales of $605 million for the year.
Adtran sales grew 25 percent last year, and the first half of this year we’ve had record quarters. A large part of that is our organic product growth, now contributing 72 percent of revenue growth. As we look to new opportunities, we want to make sure our operations are adjacent. We are traditionally strong in wired infrastructure, routers and switches. This is a natural extension, to move to wireless. The Bluesocket acquisition allows us to leverage things we already have and to combine two parallel technologies into a single, seamless integration.
With our adjacent technology, the whole network is seamless. All of the campus is plugged in, and end points have freedom across the enterprise. If I’m on a conference call or if I’m doing iPad with my daughter, I can walk around campus and have a persistent session. Management can treat it the same, whether it’s an Ethernet or wireless connection. It’s all managed together.
The other adjacency is in the marketplace. Traditionally, we’re focused on the small and medium users in a distributed enterprise market. Bluesocket allows us to focus on large campuses and enterprises. Today, we serve largely universities and campuses with 10,000 subscribers and users. But now we are moving up into larger campuses and enterprises, with adjacent technology.
For a large enterprise that is using second generation WLAN, controller-based, it limits your ability to scale. And what you want to do—and the reason we selected Bluesocket—is they use the leverage of cloud computing for management control. So you have a secure data center, either in a private cloud on campus, or a public cloud center like Amazon Cloud. You have centralized control in the cloud and can add access points to campuses around the world.
What drove us to Bluesocket is that the window is getting tight in three areas.
Number One: The world of WiFi is moving to 802.11n, the third generation of WLAN. It provides three to five times the bandwidth, from 54 megabites to 300 megabites per second. Every practice test has proven it provides three to five times more bandwidth. The whole industry is going to be migrating to this technology. They are doing it now. The technology provides better security and is a no-brainer. Everybody will be doing it. This is really dramatic.
Number two: Overnight, with smart phones and iPads, one person could have three devices. And you have machines talking to machines: security cameras talking to central monitors and hospitals with all kinds of devices interfaced. A user can only carry three or four devices. With machine to machine, who knows what the total could be? You have network growth across a campus without increasing the number of people. Scalability becomes critical.
Number three: Cloud computing. The analogy I like to draw is with electricity at the turn of the century. Back then, every business had to have its own power plant. Then, with AC electricity, it was like the arrival of the Internet: it allowed one large power plant to deliver power at a fraction of the price, without stranded capacity. Without cloud computing, every application runs on its own server. If there are 10 applications, there are 10 servers. And each application is on peak time, so you have all this extra capacity, with each server running at something like 15 percent capacity. With cloud computing, you run multiple applications on a single server. It gives everyone peaking power and significantly reduces cost. You’re not having stranded capacity.
The whole industry is moving to cloud computing—a big overall megatrend—so why not a cloud-based WiFi solution? With Bluesocket’s application of 802.11n to cloud computing, we have the opportunity to reset the entire market for wireless LAN. Bluesocket uses VMware, the largest hypervisor for cloud computing solutions. The industry is flocking to VMware.
Success will lie in the execution. It’s an incredible market opportunity, and every incredible solution comes down to execution, and we’re in a strong position to execute, starting now. Bluesocket has been on board for 15 days, and, already, the entire sales team in Huntsville is up and running 100 miles an hour.
Bluesocket is largely an engineering-focused company. What we’re doing is making sure that we nurture and take advantage of that, so we are leaving the Bluesocket team intact. The Bluesocket CEO, Mads Lillelund, will be continuing and will report to Adtran General Manager Rick Schansman, who will provide the support and muscle, with 2,000-plus employees.
Think about the execution that Adtran brings to the deal. We have the multi-tiered distribution channels—about 3,000 value-added re-sellers, and they’re clamoring at the opportunity to sell Bluesocket as the solution. We bring a huge sales channel—large service provider channels, telecoms and competitive carriers.
This offers Adtran great growth potential, and what is really exciting is it’s completely applicable across the globe. It offers a huge market to sell our solutions outside of North America.
We had set our strategy on this deal last fall, and we were into the laser-focused due diligence in the first half of this year. We had to have the right timing and two key things: Get to market quick and with a highly differentiated solution.
Chris McFadyen is the editorial director of Business Alabama.