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Is Ruckus the next big Wi-Fi acquisition target?

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Now that Ericsson(s Eric) has successfully bagged BelAir Networks, Ruckus Wireless has a big target painted on its flank. The metro-Wi-Fi vendor not only plays in the same outdoor hotspot space as BelAir, it’s arguably been more successful. As Ericsson’s competitors look to integrate Wi-Fi much more deeply into their mobile network portfolios, buying Ruckus would be the easiest way for them to get there.

Ruckus VP of corporate marketing David Callisch wouldn’t comment on whether the company was in any current acquisition discussions, but he did tell me that the attention focused on the BelAir acquisition has been nothing but good news for Ruckus. The week after Ericsson officially confirmed the BelAir (GigaOM broke the story a month earlier), Ruckus revealed a new $21.7 million in funding, bringing its total raised in 4 years to $72.7 million.

But just as important, the BelAir deal, coupled with the attention poured on Wi-Fi at Mobile World Congress last month, has raised the profile of its technology, Callisch said. Carriers now see Wi-Fi is an effective means of shunting huge quantities of smartphone, tablet and laptop data traffic onto unlicensed airwaves and more inexpensive equipment, and the big mobile infrastructure vendors have taken notice. In an email interview with GigaOM, Callisch wrote:

“BelAir was the last of the old metro Wi-Fi crowd that has struggled to make ends meet.  But they are shrewd and understand the carrier Wi-Fi market better than most. The only problem is that they are approaching a fundamentally new carrier architecture, with the introduction of small cells, with dated technology and little to no value-add with respect to Wi-Fi.  Ericsson’s purchase of BelAir is clearly a harbinger and a sign that carriers have changed their tune and want to now integrate Wi-Fi as a standard radio access method into their mobile networks. That’s just good news for everyone.”

Good for everyone, but particularly for Ruckus. According to Callisch, where BelAir merely succeeded, Ruckus has excelled, making it the best-positioned vendor in the market to capitalize on the smartphone Wi-Fi offload craze.

Staking claims across the Wi-Fi market

Ruckus already has the world’s single-largest mobile data offload network to its credit: KDDI is deploying a 120,000-access point network throughout Japan, which amounts to a one hotspot for every 266 of its customers. In the U.K., Ruckus is building a dense metropolitan network throughout London – replacing an existing BelAir network – just ahead of the 2012 Olympics. In the U.S., Ruckus is working with the cable operators to build their hotspot networks. and last week it  announced a deal with the city of San Jose, Calif., to blanket its downtown with access points.

Ruckus also has a sizable enterprise WLAN business. Though it’s nowhere near the size of market leader Cisco Systems(s csco), in the fourth quarter it shipped 132,000 business access points, according to Gartner, putting in the third place just behind Aruba Networks.

While Ruckus’ strength is in Wi-Fi it’s also attempting to build a business in the converged small cell market, following in BelAir’s footsteps. At Mobile World Congress, it took the covers off its new LTE-Wi-Fi small cell, which combines an unlicensed access point and a 4G radio into a single unit connecting back to the operator’s mobile network through a mesh of Wi-Fi links.

But with LTE, Ruckus is stepping well outside of its comfort zone. It has a lot of experience building dense high-powered metro and indoor Wi-Fi networks, but cellular base stations are highly specialized products produced by just a handful of global vendors. If Ruckus has ambitions of building more than souped-up outdoor femtocells, then it will almost certainly need the help of a major mobile infrastructure vendor. That was BelAir’s strategy as well, which ultimately led to it being acquired.

Who would be interested in Ruckus?

Two vendors that may very well be sniffing around Ruckus are Alcatel-Lucent(s alu) and Nokia Siemens Networks(s nok)(s si). Both have announced aggressive small cell strategies integrating Wi-Fi directly into their future cellular network architectures. But neither company builds its own Wi-Fi gear, relying instead on partners to supply the actual hotspot infrastructure.

Ruckus won’t talk about the possibility acquisition. Instead Callisch said that Ruckus believes it has a bright future as a stand-alone company. While the last round of funding gives the vendor a nice boost, he added, Ruckus won’t be seeking any more private investment. Instead, the company’s next planned step is an IPO, which Callisch said Ruckus would file for by the end of the year.

We’ll see if Ruckus actually gets that far. It’s looking more and more like Wi-Fi will be a critical element to future mobile broadband networks, and Ruckus, like BelAir before it, holds a lot of the key expertise and technology necessary to get those networks built.

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