Times change and companies like Microsoft and Cisco get too big and too unwieldily. They have to meet unnatural revenue and earnings growth expectations of the most unnatural group of people – Wall Street investors. In order to do so, they buy companies and technologies. And the clutter starts to eat away at the core. And that is precisely the time to attack.

With the right market, right product and extreme focus, anyone can take them on. Juniper Networks did so in the router market. And these days it is the little-known-but-rapidly-growing Aruba Networks which is having fun sniping at Cisco’s heels. The company make WiFi routers targeting large companies and software to manage wireless networks with tens of hundreds of users

Aruba, based in Sunnyvale, Calif., recently reported its fiscal 2011 (it ends July 31, 2011) and fiscal fourth quarter results, and they were astonishingly good. Revenue for the fourth quarter was $113.8 million, an increase of 47 percent from the $77.3 million reported in the same period last year. Net income for the quarter was $68.2 million, or $0.57 per share, compared with net income of $400,000, or $0.00 per share, in the fourth quarter. For the year, Aruba saw it’s revenue rise by 49 percent to hit $396.5 million, which led to net income of $70.7 million, or $0.60 per share. In 2010 the company reported a net loss of $34.0 million, or $0.38 per share.

I say astonishingly  because a whole slew of networking equipment makers have reported poor earnings, blaming Europe. The PC market is in a sustained slump. No such problems for Aruba. Its latest quarter was so good that it gained market share at the expense of Cisco. Aruba CEO Dominic Orr in a conference call with analysts pointed out:

According to the Dell’Oro Group, the enterprise wireless LAN market has grown more than 70 percent over the last eight reported calendar quarters. During this period, Aruba grew much faster than its competitors, gaining 5 percentage points of market share to 15.9 percent, including sales by our partners, while our main competitor, Cisco, lost slightly more than 4 points according to Dell’Oro’s Group report.

Orr and his company have been highly focused — it makes Wi-Fi products for the enterprises (corporations, big campuses and the government). It has diversified from making hardware to offering software to run corporate Wi-Fi networks. When I met Orr last year, he told me that iPad was the best thing that happened to his company. And how right he was. In his call with analysts he said:

I think the market at large has noticed that laptop and PC makers are under some non-trivial pressure from — in the enterprise spending perspective on the — basically the onslaught of the usage of mobile and mobile devices in terms of tablets and smartphones. To the extent that this is an established phenomenon, the connectivity of these new devices has only one choice; it is wireless.

I think most companies are beginning to feel okay with the idea of their employees bringing in their smartphones and iPads. In fact, with current economic downturn, it might be something companies may want to encourage as it allows them to save money.

But what they need is infrastructure to use these devices, and also obey corporate policies. And at the same time, we are moving towards the idea of virtual workspaces moving out of the realm of freelancer workers to big company employees who work from anywhere. Dell’Oro Group, a research firm, recently noted that wireless LAN revenues are going to top $8 billion by 2015.

Aruba’s bet on the right trends is result of inherent focus on a few things. In comparison, companies like Cisco are too distracted and have to focus on too many markets. Cisco, which is still the largest corporate Wi-Fi player brought in about $1.23 billion Wi-Fi revenues in 2010 according to analyst estimates versus $236 million for Aruba. Cisco had 56.8 percent of the market at the end of 2010 and by end of March 2011 it was down to 55.7 percent. Aruba which ended 2010 with 14 percent market share, now enjoys 15.9 percent of the market.

Shows what a little focus can do for you.

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FaceTime is an app built for the Wi-Fi network. It’s hard to imagine the phone bill if all this data was streaming over the 3G networks. And the same goes for Netflix, Hulu, Spotify and Pandora, which are key parts of our new connected digital life. These services have blossomed, thanks in part to the increasing ubiquity of the Wi-Fi network.

Applications such as these, not to mention our desire to check out tweets, Facebook friends, watch YouTube videos and occasionally even do work, has doubled the network traffic on the wireless networks since last year. These networks use gear from companies such as San Francisco-based wireless gear maker, Meraki. That traffic is expected to double every year, according to Sanjit Biswas, CEO and co-founder of Meraki.

Multiple Device Wi-Fi World

“We used to have one device on Wi-Fi: our laptop,” says Biswas. “Then we had two devices — laptop and our phones using the Wi-Fi.” Soon, we will have multiple devices that are piggybacking off the Wi-Fi based network connections.

Biswas predicts that by 2012, we will have between four and five devices around us with Wi-Fi built into them. (I actually have more than that even now: a phone, a tablet, a computer; an Internet-connected set-top box (Apple TV) and a digital camera with Eye-Fi.) Tomorrow, it wouldn’t be preposterous to imagine your microwave communing with a server over a wireless connection.

It’s quite a remarkable change. I remember buying Lucent-made Orinoco PCMCIA cards for an early variant of Wi-Fi and networking hubs with limited coverage. I used to wonder when it would really be possible for me to sit on my couch and get a decent Internet connection. That of course was in the last century; today, Wi-Fi is ubiquitous, and we want continuous coverage of at least 10 Mbps from our Wi-Fi routers. Tomorrow, we’ll want 50 Mbps and soon 100 Mbps wireless connections.

iPhone Lifts All Boats

The demand for Wi-Fi networks is lifting the fortunes of many, including some with suspect business models. Take Martin Varsavsky’s FON for example. The company has been through some ups-and-downs, but now it has started to grow and is profitable: about €4.9 million ($6.83 million USD) in 2010.

Where is all the money coming from? Offloading of data from 3G to the Wi-Fi networks. For FON, the growth has come in the U.K. and in Japan. Nearly two million FON access routers with auto connectors to the Wi-Fi network are handed out to buyers of Android-based smartphones and the iPhones. In-Stat, a market research firm, recently predicted that by 2012, nearly half of the Wi-Fi connections from hot spots are going to come from handheld devices.

Martin said in an email that while the company is still making money selling Wi-Fi routers and Wi-Fi passes to travelers, the future growth for the company is going to come from other gadget makers who are going to auto-connect to the FON network for a year via Wi-Fi, then sell subscriptions. “For example certain multiplayer games will come with prepaid Wi-Fi access so people can play them everywhere,” says Varsavsky.

Five years ago, FON had no idea that this future would unfold, just as Biswas and Meraki had no idea the iPhone would one day be its savior. It started out as a company based on MIT’s Roofnet project, and its ambition was to sell its wireless mesh networking hardware to hotels and other establishments, particularly in non-western markets. It proved to be a tough proposition, to say the least.

In 2009, the company, which has raised over $40 million from the likes of Sequoia Capital and Google, went through a metamorphosis and shifted focus to the enterprise market. Being at the right place at the right time, the company has seen the total number of deployed networks hit 17,000 at the end of 2010. Its growth has followed the trajectory of the wireless LAN market; in 2010, WLAN sales were up 23 percent to $2.7 billion, according to Infonetics Research.

The Smartphone Boom and Network Effects

At my request to find out what devices were connecting to the networks, Meraki took a random selection of over 7 million devices (roughly a fifth of the total devices connecting to Meraki-based networks) and found the iPhone accounted for nearly a fourth of the total Wi-Fi connections.

In aggregate, Android, iPhone and iPad accounted for about 16.53 percent of the total connections in middle of March 2010. As of March 14, 2011, these three devices now account for about 33 percent of the total connections to network.

Why the growth? While laptops were used for wireless access, it’s difficult to walk around and use them as easily one can use a smartphone or an iPad. The smart devices encourage anywhere computing, which, in turn, puts a different load on the networks. Dominic Orr, CEO of Aruba Networks, put it best when he said, “The network model has shifted from hotspots to ubiquitous and uniform networks access.”

One of Meraki’s clients has data to show that. Westmont College, a liberal arts college campus in Santa Barbara, Calif., showed in a study that nearly 3137 distinct clients connected to the Meraki wireless network in February 2011, and about 10.12 terabytes of data wer transferred.

A year ago, the data transferred was about 5.06 TB and a total of 2458 distinct clients used the network in the month. Why? Because there was a sharp increase in the number of iPhones, iPod touches and yes, there were a few iPads too.

Where Do We Go From Here?

Biswas, who has been involved with Wi-Fi for a long time, believes a future version of Wi-Fi (IEEE 802.11 ac) is going to become an apt replacement for the gigabit Ethernet wired connections in a couple of years. Currently under development, we’re likely to see the earliest devices show up in late 2012.

But one thing he knows for sure: Wi-Fi is going to be the default network connection in our homes. Today, we might sit on the couch and be amazed at the novelty of FaceTime on an iPad, but in a few years, it will be as normal as life with Facebook.

With more devices connecting to this network, it’s only a matter of time before we see even faster wireless connections inside our homes.

This is good news for developers and innovators, who don’t have to wait for the carrier’s wireless infrastructure to catch up to their ingenuity. What are you waiting for? Time to get going!

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For Dominic Orr, CEO of Sunnyvale, Calif.-based Aruba Networks, this is nothing new; his company makes wireless networking gear and has been on a tear for past year or so. In a recent earnings-related conference call with analysts, Orr talked about the future demand coming from corporations who are seeing a big shift in the way their networks are being used.

Our James Kendrick had first pointed out (subscription req’d.) the potential of Apple’s iPad as an enterprise tool as early as April this year. From anecdotal evidence, we’ve heard many companies are building specialist enterprise apps. The financial industry, in particular, has been quick to embrace the iPad.

“The network model has shifted from hotspots to ubiquitous and uniform networks access,” Orr told me. Companies now want wireless access not only in boardrooms and hubs of productivity, but also in stairwells, corridors, kitchen and other areas. Why? Because the devices accessing the network are entirely different, he pointed out. “Our demand is being driven by smartphones and smartpads,” he said. In the past, laptops were used for wireless access, but it was difficult to walk around and use them as easily one can use a smartphone or an iPad. The smart devices, however, encourage anywhere computing, which, in turn, puts a different load on the networks.

Furthermore, iPads and tablets are very multimedia-centric, which means folks are looking for good, solid and even coverage across their entire campus, and not just in certain specific areas, Orr pointed out. “While netbooks and laptops have wired Ethernet built into the them, the new smart devices can only access the Internet via mobile connections,” he added. “You either have 3G or Wi-Fi.”

As a result, the demand for wireless gear is surging. A recent report by research firm Dell’Oro Group estimates that the enterprise wireless local access network (WLAN) technology market will grow from $2.2 billion in 2010 to $3.4 billion in 2014.

It’s the C-Suite executives who are pushing the iPad deployments in the enterprise, Orr observed. It’s one of the reasons why iPad is finding easier traction inside the enterprise and will continue to gain momentum: So much so, Aruba recently upgraded its software platform to address the needs put on the network by iPads and other smart devices. With nearly 48 million iPads likely to be sold next year, Orr is licking his proverbial chops.

So what about Juniper with Trapeze? “That will have no major impact on our business,” he added. Instead, he hopes to battle it out with Cisco Systems and Hewlett-Packard, his long-standing and larger rivals in the Wireless LAN business.

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According to a Boxee spokesperson, the funding will be used not only to keep the doors open but to hopefully instill confidence in potential partners, such as device manufacturers, that Boxee will be around for awhile.

Boxee is a free, open-source media platform initially based on the XBMC project that allows users to watch and share media like movies, music and more from Internet-connected devices hooked up to their TVs. The company went into alpha in June of this year.

The New York-based company was started in earnest in 2007 has 10 employees, eight of whom are in Israel.

It’s always notable when a company gets funding in this current economic climate, but what makes Boxee more intriguing is that much of the news about the service recently revolved around hacking it onto devices like the Apple TV, or unofficially integrating services like Hulu and CBS.com.

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