There are many factors to consider when a technology vendor decides to pull the trigger on an acquisition. Things such as impact to channel, customer reaction, product rationalization and other issues must be thought out.
However, sometimes an acquisition seems to be a great fit and the decision is “black and white,” meaning it’s crystal clear with no shades of grey. This appears to have been the case for Extreme Networks, which earlier this week scooped up the wireless LAN (WLAN) business from Zebra Technologies for $55 million.
Extreme will receive Zebra’s entire WLAN portfolio, including Zebra’s new 802.11ac APs, the WiNG wireless operating system, the unique wall plate and tri-radio APs, NSight troubleshooting tool and AirDefence wireless intrusion prevention system. Also, Extreme will receive the managed services business from Zebra, bringing new capabilities.
Zebra’s wireless technology came from the 2014 acquisition of Motorola’s enterprise business and now stands at $115 million annually. The roll up of Zebra and Extreme’s WLAN business makes Extreme the #3 or #4 vendor, depending on what metric is being used. This significantly bolsters its position in the market, moving it from being a niche vendor to a major industry player.
Instant WLAN credibility for Extreme
More important, Extreme gets instant credibility and big name customers in the retail and transportation and logistics markets. Zebra’s customer base is a “whose who” in those verticals and includes the likes of FedEx and WalMart. Extreme should be able to parlay those relationships into broader networking sales that includes a robust campus solution and SDN data center portfolio.
Also, while Extreme already had its own WLAN product, it was meant more for super-high-density environments such as Gillette Stadium and many of the other entertainment venues the products are in. Zebra’s product is optimized more for geographically dispersed locations that have a lower overall population density. Neither is better, per se. They’re just different use cases, and Extreme can now address both.
The new customer base also gives Extreme a new group of customers to sell its ExtremeAnalytics (formerly known as Purview), which provides rich network data and analytic information. The product is used to understand customer trends and discover new insights that can facilitate the improvement of customer or workforce experience. For example, several NFL teams use ExtremeAnalytics to gather intelligence on which applications and devices fans are using devices and where congestion is, then use the information to improve the overall fan experience.
Most retailers today have digital initiatives underway to understand how shoppers use their networks, improve the experience and create greater levels of engagement in the store.
Customer experience improvement is the top initiative for retail companies today and will be the single biggest differentiator in this vertical in the digital era. In fact, ZK Research shows that over two-thirds of millennials have switched providers or loyalties in the past year because of a poor experience. ExtremeAnalytics should be a great complement to the existing wireless solutions already found in Zebra customers today.
There’s some obvious product rationalization to be done post close of Zebra, and when asked about it, the company said this would happen sometime in late 2017. Until then, the two products are complementary, and I don’t expect much in the way of channel or customer confusion.
It’s fair to say that the Extreme/Enterasys merger disrupted the business more than the company had expected, but the challenges have been sorted out and business performance has been strong the past few quarters. I expect Zebra to give the company another shot in the arm as it looks to add to its recent strength.