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Recent Mojo acquisition (no, really, that's the company name) extends Arista's network automation strategy from core to campus.
August 14, 2018
Arista's having a landmark August. The company announced its first acquisition, settled a messy intellectual property lawsuit with Cisco and topped a $2 billion run rate.
Arista Networks Inc. announced the deal to acquire WiFi management company Mojo Networks with little fanfare on August 2, to coincide with its quarterly earnings report. (See Arista to Acquire Mojo Networks for Cloud-Based WiFi Networking and Arista Passes $2B Run Rate with $519.8M 2Q Revenue, Up 28.3% YoY.)
The Mojo acquisition helps Arista extend beyond its roots in the data center, where it provides high-power, core networking equipment for the largest enterprises and so-called "cloud titans" such as Microsoft Corp. (Nasdaq: MSFT), into the enterprise campus.
Arista had signaled such a move, announcing to analysts in May its intention to extend into enterprise campus networks. According to John McCool, Arista chief platform officer and senior vice president of engineering and operations, it will achieve this using the same focus on product quality, scalability and deployment simplicity as it offers with its data center products.
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WiFi management is essential to campus networking because so many devices, including tablets, mobile phones and (increasingly) Internet of Things devices, are connected wirelessly, McCool says. Mojo, which has developed a system for automated WiFi management, fills the WiFi void in Arista's toolbox.
"In layman's terms, the Wi-Fi network is now mission critical, and that presents an opportunity for Arista to insert itself into that market," analyst Zeus Kerravala, founder and principal analyst of ZK Research, wrote. "Arista likes high-value networking, and it's fair to say Wi-Fi has never been more important than it is today."
But there's more to the deal than just WiFi, McCool says. Mojo provides expertise and technology in "cognitive management" -- in other words, automated network management -- which Arista has been working on with its CloudVision technology, launched in 2015, McCool says. (See Arista Launches Network-Wide Cloud Automation.)
"It really helps us [develop] the whole enterprise stack by enabling the campus component that we're building out. It takes us into the wireless area. And maybe even most importantly, redoubles our effort to build out the cognitive management plane that we've been working on with CloudVision," McCool said.
The companies did not disclose the value of the acquisition. Mojo has about 250 employees, and is based in the US, with an engineering team in India, where the company launched. Mojo CEO Rick Wilmer will stay on to assist with the integration, and founder and CTO Pravin Bhagwat will run the engineering team in India under Ken Duda, Arista founder, chief technology officer and senior vice president of software engineering.
Still undecided is whether Arista will continue to use the very cool Mojo brand. "Extent of the use of 'Mojo' is still to be decided," McCool says.
Jefferies analyst George Notter expressed skepticism about the deal. In an email, Notter said Jefferies is "troubled" by the acquisition: "Our concern is that it signals a change in strategy -- specifically, that Arista is headed fully into the campus networking market." Previous direction into campus networking this year simply involved leveraging Arista's existing R&D and product portfolio, but the Mojo acquisition is a much bigger leap. "Now, with Mojo, they're buying a portfolio of access points, wiring closet/stackable/[Power Over Ethernet] switches – i.e. fully entering the campus market."
Notter adds: "These types of M&A deals -- where a company moves orthogonal to their core business -- make us wonder if something is wrong with the base business itself."
Not surprisingly, McCool counters that suggestion. "The core market is very strong. We're a company that intends to be around for a long time, and anticipate we will continue to grow," he said. "We look at this as a long-term commitment to the enterprise, broader than campus, and adding value to customers through ... orchestration of the components they expect to run."
Next page: Extending Arista's Mojo
Arista sees the addition of Mojo's management tools as a way to enhance its entire product line, including its traditional data center products, building on Arista's efforts to provide a uniform environment and set of tools from the network core to the edge, McCool says.
And that uniformity is a competitive advantage as Arista goes up against the much bigger Cisco Systems Inc. (Nasdaq: CSCO) in the campus market. While Cisco has numerous platforms -- multiple sets of tools that network managers need to understand and handle -- Arista has just the one. "We vastly simplify the number of devices that you need to deploy," McCool says. (See Arista Takes Aim at Cisco: 'Legacy Routers Are a Thing of the Past'.)
Historically, each part of the network required different devices, with different ASICs and software. "We think that was maybe an awesome idea in 1990, when you had to build the Internet for the first time, but in the world of cloud, more homogeneity of your equipment, more disaggregation of your software, and richer APIs is the way you've got to do it. And you can simplify your operating model tremendously," McCool says.
It's not just Cisco and Arista. VMware Inc. (NYSE: VMW) and Juniper Networks Inc. (NYSE: JNPR) are making their own end-to-end campus plays, bridging networks from the data center to the campus and to the network edge.
Cisco launched APIs in June to allow third parties to program its networking equipment, extending its automated network management strategy -- which it calls "intent-based networking" -- from the data center to the campus. (See Cisco Shows Open Networking Intent.)
VMware outlined a vision in May for a unified network architecture spanning the on-premises data center, enterprise branches and Internet of Things, as well as multiple cloud providers. (See VMware Takes On Cisco & Juniper With Network Vision.)
Juniper spelled out its strategy in February for breaking down networking silos between branch, campus, data center and cloud. (See Juniper Looks to Weave Multicloud Network.)
The Mojo acquisition was one of three milestones for the normally quiet Arista this month.
It agreed to pay $400 million to settle allegations that Arista made unauthorized use of Cisco intellectual property in its equipment. That's a lot of money, even for Arista, but it settles a lawsuit that threatened to cripple the company. (See Arista Shelling Out $400M to Settle Cisco Litigation.)
And in its earnings report for the quarter ending June 30, Arista surpassed a $2 billion run rate by reporting quarterly revenues of $519.8 million, up 28.3% year-over-year. (See Arista Passes $2B Run Rate with $519.8M 2Q Revenue, Up 28.3% YoY.)
Arista's stock is currently trading at $269.28, up from $231.03 at the beginning of this calendar year.
— Mitch Wagner Executive Editor, Light Reading
Executive Editor, Light Reading
San Diego-based Mitch Wagner is many things. As well as being "our guy" on the West Coast (of the US, not Scotland, or anywhere else with indifferent meteorological conditions), he's a husband (to his wife), dissatisfied Democrat, American (so he could be President some day), nonobservant Jew, and science fiction fan. Not necessarily in that order.
He's also one half of a special duo, along with Minnie, who is the co-habitor of the West Coast Bureau and Light Reading's primary chewer of sticks, though she is not the only one on the team who regularly munches on bark.
Wagner, whose previous positions include Editor-in-Chief at Internet Evolution and Executive Editor at InformationWeek, will be responsible for tracking and reporting on developments in Silicon Valley and other US West Coast hotspots of communications technology innovation.
Beats: Software-defined networking (SDN), network functions virtualization (NFV), IP networking, and colored foods (such as 'green rice').
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