Meraki is driving the growth in Cisco’s wireless segment
In the last part of this series, we discussed how Cisco’s (CSCO) security business showed strong growth in the last quarter. The company’s wireless business has also been showing decent growth. Its YoY (year-over-year) revenue grew by 10% in fiscal 3Q15. This growth is primarily driven by its acquisition of Meraki for $1.2 billion in November 2012. Meraki’s technology provides a means to control Wi-Fi networks through the cloud.
During the company’s fiscal 3Q15 earnings call, Cisco’s management mentioned that its Meraki business grew by 92% YoY. However, the company saw some softness in the public sector’s wireless spending. Cisco’s security business revenue growth did slow down sequentially, as the above chart shows. The slower growth could also be due to the issues that it’s facing in China (FXI). The company’s overall revenue from China was down 20% on a YoY basis in fiscal 3Q15.
Wireless market is becoming competitive
The wireless market is becoming competitive every day. A few months ago, HP (HPQ) acquired Aruba Networks (ARUN) for $3 billion. Aruba makes Wi-Fi network systems for enterprises, hotels, and universities. According to a report from the IDC (International Data Corporation), Cisco, Aruba, Ruckus Wireless (RKUS), and HP are the top four players in the enterprise wireless local area network market. However, after acquiring Aruba, HP has become an important player in the enterprise wireless network market, thereby increasing competition with Cisco.