Extreme Networks buying Avaya networking good for customers of both companies

Combining Avaya’s networking business with Extreme Networks creates a company with best-inclass products that span the entire enterprise network

Extreme buying Avaya networking good for customers of both companies

The fate of Avaya’s networking business has been the subject of speculation for well over a year now. In December, I wrote about the most likely suitors for the business. Ideally, I would have liked to have seen Avaya remain a “full stack” solution provider and keep the group, but it appears that wasn’t in the bankruptcy cards. 

This brings us to the current news where the winner of the Avaya Networking sweepstakes is (drum roll… although its in the title) Extreme Networks. That’s correct: Purple Extreme Networks is purchasing the networking assets from Avaya (Red) that came to it from Nortel (blue), so from a color perspective, it all makes sense. 

+ Also on Network World: Extreme grabs Avaya’s networking business for $100M +

Under the terms of the agreement, the assets of the Avaya networking business unit will be sold to Extreme for about $100 million, which is great value for an organization that does about $200 million in revenue annually. 

Because Avaya is in the chapter 11 process, Extreme is considered the stalking horse bidder in what amounts to an auction process. Another company could potentially come along and make a higher offer at which time Extreme could choose to up its own bid or get paid a break-up fee and expense reimbursement.

The final agreement requires approval of the U.S. Bankruptcy Court for the region of the Southern District of New York. There are obviously a lot of “ifs and buts” that can happen between now and the end of May/beginning of June when the deal would be finalized, but I think it’s highly likely that Extreme will be the owner of Avaya's networking technology come mid year.

Positive move for Extreme, Avaya and their customers

Assuming the deal is done, the acquisition will be a positive move for Extreme and Avaya, as well as both customer bases. On the surface, one could look at the two companies and think there is a tremendous amount of overlap, but the two portfolios are very complementary—although Avaya and Extreme share a common vision of a “data center to edge” network that is simpler to deploy, standards-based and easier to operate. It just so happens that both companies were in different points of evolution.

One of the biggest opportunities for Extreme is to refresh some of its aging switching lines. I know both Avaya Networks and Extreme have new chassis on the roadmap, and I expect Extreme to offer both as options for different customers in different verticals. The data center is hot right now, and the new products give Extreme the opportunity to take some share back. It’s possible they could consolidate the products down to one set, but my assumption is the company will move forward with both.

Looking more near term, Avaya’s current Fabric Connect product is a layer 2 fabric, which complements Extreme’s layer 3 fabric nicely. I’ve long felt that Fabric Connect was the networking industries best kept secret. It started slow but has ramped quickly over the past year, and it now has about 1,100 customers using it. Many of these customers are major logos and include the likes of Marriott, eBay, Comcast, Bell Canada, Coca-Cola and the Wynn Hotel. It is a highly agile platform with a stealth core, so changes need to be made at the edge only and then automatically propagated across the network. The combination of the two fabrics gives Extreme’s great flexibility when it comes to selling to customers.   

Lastly, late last year Avaya introduced a cloud management front end built on the principals of zero-touch activation, security, scalability and high-service availability. From what I understand, the cloud management suite is an open platform, so Extreme should be able to extend it to its own products relatively easily. 

Extreme’s strengths lie in its strong fixed form factor switches, as well as software, wireless and analytics. In fact, Extreme Analytics is so good that the last three Super Bowls used the tool to capture interesting data points regarding network usage and fan behavior. The combination of the two companies creates a company with best-inclass products that span the entire enterprise network. 

What selling Avaya’s networking business means

I’d also like to address some of the speculation I’ve seen and heard regarding the disruption to Avaya and it’s customers. The sale of the networking business in no way foreshadows that the company will divest itself of either the UC or call center groups. The move was made to allow Avaya to focus its energies in these areas, and selling off one of the business would make no sense.

Also, current Avaya networking customers should expect no disruption. I’ve talked to Avaya’s management team at length about this, and the plan is for Avaya to be a large reseller for Extreme’s networking products. If anything, Avaya customers will have access to a broader set of products, particularly when it comes to wireless and analytics.

Similarly, Avaya channel partners will be able to see networking gear just like it did before, except the label will be Extreme instead of Avaya. During the process, reseller partners can continue to quote and sell Avaya networking products, and Avaya will fulfill these orders and support them the same way they always have, so again, business as usual.

I did see an odd question on Twitter and I checked with Avaya on this to be sure. The question was regarding the fate of Avaya’s name and products in the stadiums it sponsors, such as the Bell Centre in Montreal and Avaya Stadium in San Jose. These are large, multi-year deals that include several products, and I was told that Avaya remains the brand and the products will remain intact.

In summary, the combination of Extreme and Avaya Networking creates a bigger, stronger company with a robust portfolio that is better able to compete with the big boys. The customer bases of both Avaya and Extreme will benefit from this combination, as they will have more choices to address the needs of a world where everything is being connected.

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