Aerohive price aggression accelerating

Yesterday, Aerohive announced an expansion to its Connect Strategy that results in price cuts across its entire product line by virtue of its extension of its Connect cloud-services offering to all products.  Given that Connect is a free version of cloud-managed services, it would accurate to say Aerohive is now pursuing a price-aggressor strategy in the WLAN marketplace.  Price aggression has been effective in this market, with Ruckus (now part of Brocade) having pursued a price aggressor strategy over 5 years ago (this resulted in share gains, culminating in Ruckus achieving the #3 Enterprise-class market status for a while), and with Ubiquiti and Huawei currently pursuing price aggressor strategies (both are gaining share).  So, it looks like Aerohive decided to join in on the price-aggression.

On Aerohive’s latest earnings call for the period ending March 2017, which covers a portion of its operating results where Connect was announced, the company said its margins were largely unaffected as a result of Connect.  This essentially means that most customers are still paying for the paid-for version of cloud-managed called Select.  It is certainly possible that new customers in coming quarters will chose the free Connect version and not opt to pay up for Select.  We will be watching margins!