David Flynn, president and chief executive officer of Aerohive Networks, presented at the Credit Suisse Annual Growth Stock Conference this week. Mr. Flynn spoke to the changing dynamic of enterprise WLAN, with the barriers to participation rising as value-added mobility solutions have overtaken basic connectivity requirements. This has limited the amount of true competitors with the portfolio of solutions to address these issues, with Aerohive strongly positioned with its unique, unified portfolio of cloudmanaged, controllerless Wi-Fi- products.
Additionally, Mr. Flynn noted efforts taken toward diversifying the company s U.S. education-concentrated customer base into retail, large enterprise, and international. Lastly, he noted misconceptions in the competitive landscape, noting only three real vendors for enterprise Wi-Fi (Aerohive, Aruba [ARUN $17.54; Outperform], and Cisco [CSCO $24.66; Outperform]), with the remaining congestion comprised primarily of declining vendors losing share to the major players. Mr. Flynn addressed the state of the WLAN market, noting that legacy Wi-Fi deployments were architected for basic connectivity and not designed to address the mobility explosion of today.
As a result, key issues, such as scale, access control, and applications require more advanced offerings that most WLAN vendors are not equipped to adequately provide, which is why several vendors are fading in the market, such as Motorola (MSI $66.46), HP (HPQ $33.39), Meru (MERU $3.67; Market Perform), and Juniper (JNPR $24.63; Outperform)/Trapeze. Mr. Flynn pointed to Aerohive s product portfolio as strongly positioned for this new WLAN reality, providing a unified platform from wired to wireless to the cloud, without the cost and pain points of a controller-based architecture.
Commenting on the company s currently concentrated customer segments (education roughly 45% of revenue; North America roughly 62% of revenue), Mr. Flynn stated that the company is making significant inroads into retail and some larger enterprises. Additionally, he noted that nearly all international revenue is non-education, so as the international arena gains revenue share, the company s concentration, both geographically and by segment, should subside. That said, Mr. Flynn commented that the education segment abroad has lagged that of the U.S., which could create a good opportunity to replicate the success the company has had in the U.S. education sector, as international schools adopt more Wi-Fi-based learning tools.