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Belden buys Trapeze Networks in another WLAN deal

Things are getting scrappy in the WLAN market as Trapeze is acquired by Belden and a competitor moves in on its channel partners.

Belden Inc. will acquire Trapeze Networks, one of the largest privately owned wireless LAN (WLAN) providers, for $133 million in cash. How the deal will affect some 200 Trapeze partners is unclear.

The acquisition appears to be part of a continuing trend of consolidation in the WLAN market -- leaving many in the industry wondering if it's still possible for small, independent players to stay afloat.

Meanwhile, at least one independent WLAN player is eyeing Trapeze partners with a channel program designed specifically for resellers from the acquired company who are looking for a new deal.

The acquisition will help Belden, a publicly traded supplier of copper and fiber optic cabling and access technology, instantly morph into a unified wired and wireless transmission player. Cisco, Siemens and Nortel have all trumpeted unified wired and wireless inside the network this year. Belden, which predicts about $2.3 billion in revenue this year, would become a megaplayer after acquiring Trapeze, which estimates it will earn about $70 million.

Belden president and CEO John Stroup noted during a conference call last week that offering "fiber backbone, copper to the desk and wireless anywhere" is "mission-critical" to the enterprise. He added that revenue from wireless LANs is increasing at 25% a year, apparently making the acquisition a financially sound choice.

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Trapeze executives say the companies are a natural match.

"It's fair to say there is a pretty good overlap between our channel partners and Belden's partners," said Trapeze spokesperson Brian Johnson. "If you're going to install an access point or controller, you're going to cable it." As a result, at least a few partners are cross-certified with the two companies.

But Belden executives won't provide details on what will happen to Trapeze partners until the deal passes through government regulatory consideration in just under a month. Nor are executives confirming whether Belden's extensive partner channel would begin selling Trapeze equipment. If it does, that could present a challenge to the much smaller population of Trapeze partners. Belden wouldn't give an exact number of its channel partners.

"We want to make sure that we are going to do everything with the customer in mind," said Steve Biegacki, senior vice president of global sales and marketing, adding that all of Trapeze's more than 4,000 customers would continue to receive the products and support they invested in.

But, when asked to provide the same assurance about keeping Trapeze partners happy, Biegacki declined, saying that doing so would violate the quiet period before government approval.

Nortel, one of the largest Trapeze partners, does not seem fazed by the deal.

"We view this as business as usual. In April we renewed our contract with Trapeze for two years," said Nortel spokesperson Pat Cooper, stressing that he fully expects that contract to remain intact. "This is a noncompetitive acquisition."

A few companies, including Nortel, once had WLAN relationships with Airespace, which was later acquired by Cisco Systems in 2005. That acquisition left companies that competed with Cisco on the lookout for a new WLAN deal while they still had customers on Cisco product.

Ruckus causes a ruckus

Meanwhile WLAN provider Ruckus Wireless is angling to poach Trapeze partners. On Monday, the company will announce a special program offering Trapeze partners incentives to come aboard.

For the next 90 days, Trapeze partners will receive automatic gold certification in the Ruckus Big Dog program, as well as equipment rebates and gross margins for existing qualified opportunities that are converted to Ruckus' ZoneFlex system.

"Trapeze was one of the few wireless LAN players that built a channel full of smart resellers that have now been effectively left high and dry," said Rob Mustarde, vice president of worldwide sales at Ruckus Wireless, in a statement.

WLAN consolidation and competition

In fact, there is no indication that Trapeze partners will be left in the dust. Ruckus' moves are indicative, though, of an industry segment that has become scrappy under pressure of consolidation.

While WLAN uptake grows, the financial markets are weak, so many small but growing players can't go public, yet they often can't afford to remain competitive against heavy hitters like Cisco. As a result, a number of these players are looking to be acquired.

As part of that trend, Cisco acquired Airewave and Motorola acquired Symbol Technology in 2006. Aruba Networks went public in 2006, and many suspect that was the last time that would happen for an independent WLAN company for a while. Meanwhile, Meru Networks and Colubris are some of the best-known independent players that still remain, as well as Ruckus and Extricom.

Still, Farpoint Group founder Craig Mathias, who covers dozens of small wireless LAN companies, doesn't believe consolidation will kill competition. That said, this acquisition signals opportunities for larger networking companies looking to diversify with unified wired and wireless networking.

"Unifying networking is the key thing going forward here," Mathias said. "If you're a Foundry or Juniper or HP, there may be some real opportunities."

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