July 26, 2004 9:29 AM PDT

Wireless upstart scores $42 million in funding

Aruba Wireless Networks, a wireless-switch start-up, is adding cash to its coffers and signing up new partners, as it puts the heat on big players in the wireless market, such as Cisco Systems.

On Monday, Aruba announced that it raised a total of $42 million in its third round of funding. It received $27 million in equity funding and $15 million in debt and working capital, which the company said it will use to build up more customers. WK Technology Fund, based in Taiwan, led the round. Previous investors also contributed.

Aruba also announced a new partnership with Hewlett-Packard. Industry analysts had been speculating since June that the companies would announce a deal. The agreement calls for HP to resell Aruba's wireless switches and access points as part of its professional service consulting business.

"We expect this relationship to be a very significant source of revenue for us," said Don LeBeau, CEO of Aruba. "We also believe it will help accelerate the adoption of wireless LANs (local area networks) in general."

Aruba's wireless networking portfolio consists of wireless access points that automatically tunnel communications to its wireless switches. The switch provides centralized services such as encryption and decryption, authentication and packet inspection.

One switch manages several access points, allowing for the automatic discovery and management of access points. The access points support 802.11a/b/g traffic simultaneously. The company plans to introduce 802.11i-based encryption on products sometime in August.

LeBeau said Aruba has added several security features to its switch to provide intrusion detection and prevention, firewall and radio frequency management.

Wi-Fi, or wireless LAN technology, has become a hot, emerging technology over the past year, as more corporate customers look for ways to make their work force more mobile.

Aruba has already seen an increase in customers. Since June 2003, when it first started selling its switches and access points, the company has signed up 300 customers, including big names such as Microsoft and Yahoo, which use the gear to build their own wireless networks.

Even though the company has gotten off to a good start, forging new partnerships, such as the one with HP, is crucial. The start-up faces stiff competition from a growing number of vendors, including Cisco and Symbol Technologies.

Smaller players, like Airespace, also pose a threat to the company. Airespace has formed reseller partnerships with large telecommunications equipment providers Alcatel and Nortel Networks.

 

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