The two companies led a $16 million C round, but they lend something far more important to Ruckus - the look of credibility

October 10, 2006

5 Min Read
Moto, T-Online Back Ruckus

The WiFi home networking company Ruckus Wireless Inc. said Monday it has received new funding from Motorola Ventures and T-Online Venture Fund, a subsidiary of German incumbent Deutsche Telekom AG (NYSE: DT)'s T-Online International AG division. (See Moto, T-Online Back Ruckus.)

Motorola and T-Online led the $16 million round, with some of Ruckus's earlier investors -- Sequoia Capital , Sutter Hill Ventures , Investor AB,and WK Technology Fund -- also participating. Ruckus says Motorola put in the most money (it wouldn't say how much), and the VC firms put in enough to maintain their previous ownership in the startup.

Ruckus has raised approximately $30 million in three rounds of funding since its launch in 2004. Its last round of $10 million came 15 months ago, the company says.

“The finance guys have taken an interest in our company,” Ruckus VP of worldwide sales Rob Mustarde explains. “They will introduce us, or reintroduce us, to the various divisions but at the end of the day those divisions will decide.”

It's easy to read things into the idea that a big supplier like Motorola and a big carrier like T-Online are investing in little Ruckus. “It does not necessarily mean they will be doing anything with our products,” Mustarde says. “But clearly what it does indicate is that the scene is set for us to extend our discussions with those organizations.”

Ruckus hopes those discussions might move in the direction of T-Online deploying Ruckus WiFi gear in the premises of its subscribers. “The last 100 meters represents one of the last major obstacles for operators, and one that Ruckus is attacking with a unique yet practical approach.” said T-Online Venture Fund manager Petra Buchholz in a statement Monday.

Motorola's involvement as an investor could lead in a few different directions, Ruckus believes. Motorola might end up selling Ruckus's product in its existing form, or inserting the guts of the product into various Motorola products, Ruckus marketing director David Callisch says. Motorola may also consider using Ruckus technology in new fixed/mobile applications where dual-mode handsets cross between 3G and WiFi networks. (See Dual-Mode Handsets to Top 300M.)

As for the new $16 million in funds, Ruckus says it has no pressing need for the money right now. "It's much better to go and get money when you don't need it, and when you are in a position of strength," Mustarde says. Still Ruckus says it's at least 12 months away from profitability, so it doesn't hurt to have the money in the bank. (See Ruckus Wireless Inc..)

But there's a bigger picture here. The funding could have implications for home networking in general, just as the telco TV business is getting going around the world. (See RBOCs Want Inside Your House.)

Ruckus's core product is an in-home WLAN router which it says can reliably send high-bandwidth video signals (IPTV) around the home. No wiring, old or new, is needed. The Ruckus router is small and C-shaped, and sends hi-bandwidth signal over 802.11 to other, similar C-shaped devices situated at TVs throughout the home. Ruckus says the router sends WiFi signals in a concentrated beam at the receiving device, while most other WLAN devices send the signal out in all directions at once. (See Ruckus Pioneers IPTV in US.)

If the Ruckus gear proves able to route IPTV, 802.11 WLAN could trump competing home networking standards like MOCA, which uses coaxial cable, and HPNA, which uses either coax or home phone lines. (See Entropic, Verizon Serve Up MOCA and AT&T: Hold the MoCA.)

“As recently as a year ago, WiFi wasn't realistically considered a contender for multimedia home networking applications,” writes Heavy Reading analyst Rick Thompson in a May report called Multimedia Whole-Home Networking: Solving the IPTV Distribution Dilemma.

Thompson believes carriers remain somewhat conflicted over WiFi home networking. “The irony is that every service provider Heavy Reading spoke with, worldwide, unanimously desires a WiFi-based solution for multimedia home networking. Granted, many of them don't feel the industry is there just yet,” Thompson writes. “Neither do we, but it's certainly getting there."

Thompson points out that Ruckus gear isn't achieving data rates as high as MOCA. Ruckus, however, "is doing well enough to support multi-channel MPEG-2 SD and potentially MPEG-4 HD," Thompson writes.

With major players like Motorola and T-Online stepping up, Ruckus and its technology take on a new layer of credibility.

Callisch explains that Ruckus had been trying to sell its technology to both Motorola and T-Online, when in both cases the venture capital arms of those companies intervened. “We didn’t actively approach Motorola or T-Online Ventures for this round,” Callisch says. “We had gone after their business.”

Ruckus's relationship with Motorola really began earlier with the set-top box maker Kreatel Communications AB , which Motorola acquired in January. (See Moto Buys Swedish Set-Topper.) Kreatel had been experimenting with the idea of embedding the Ruckus technology into its set-top box, and introduced the idea to Motorola's venture capital people after the acquisition.

The Ruckus people believe they've already proven -- to the carriers who have asked to try it -- that services like IPTV can be sent over standard 802.11. (See Ruckus Touts Wins.) They're now working on adding to their product some of the ancillary features that carriers require in mass market CPE, such as remote management, idiot-proof home deployment, and more thorough integration with the carrier's backend systems, Mustarde explains.

These requirements were the basis for the latest version of the company's product, MediaFlex NG, which was announced separately Monday. (See Ruckus Intros Enhanced Router.) Ruckus also announced Monday it had won new business at Telefónica O2 Czech Republic . (See Ruckus Wins Czech Carrier.)

That win will bring Ruckus's customer count up to about 50 service providers worldwide, the company says. (See Mini Ruckus.)

— Mark Sullivan, Reporter, Light Reading

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