Ed Meyercord’s plan for Extreme Networks proves to be ‘better than most’

Extreme Networks continues industry consolidation with acquisition of Brocade’s data center networking business

Ed Meyercord’s plan for Extreme Networks proves to be ‘better than most’
Extreme Networks

Any fan of the PGA Tour will never forget the “better than most” call by NBC’s Gary Koch. On March 24, 2001, Tiger Woods stepped up to execute one of the most difficult putts of his career. Halfway to the hole, Koch uttered the words “better than most” as it looked like his putt was going to be a good one. It wound up going in, and that become yet another notable moment in Tiger’s illustrious career where great execution was becoming the norm. 

In the highly tumultuous networking market, Extreme Networks’ CEO, Ed Meyercord, continues to make moves that are “better than most,” putting his company in a position to be a long-term share gainer in a market that badly needs more strong vendors. 

In late 2016, Extreme acquired Zebra Technologies’ WLAN business for $55 million, giving it instant credibility in some of Zebra’s larger accounts, such as FedEx. Earlier this year Extreme made a move to purchase Avaya’s Networking business by becoming the stalking horse bidder in the business unit that was put up for sale in Avaya’s bankruptcy process. 

Yesterday, Extreme executed another deal that should be considered better than most when it announced it had entered into an agreement to purchase Brocade’s data center switching, routing and analytics business from Broadcom, following Broadcom’s acquisition of Brocade. Under the terms of the agreement, Brocade will sell those assets to Extreme for $55 million, which consist of $35 million at closing and $20 million to be paid in deferred payments, as well as the additional profit sharing to be paid over a five-year term. 

What Extreme Networks will get from Brocade

Extreme will acquire the following products as part of the deal:

The hardware portfolio of products includes Brocade’s VDX, MLS and new SLX hardware platforms. All are great products, but the new SLX family has embedded visibility and DevOps like automation making it one of the most agile networking products available today.

In addition to the hardware, Extreme will get the following: 

  • Flow Optimizer
  • Workflow Composer and automation suites from the StackStorm acquisiton
  • Automation suites
  • Network Visibility
  • Network Analytics
  • Visibility Manager
  • Packet Broker
  • Virtual Packet Broker
  • NVA Virtual TAP (vTAP)

In Michael Cooney’s story about Extreme’s purchase of Brocade’s data center networking business, he indicated that Extreme was receiving all software. But from what I understand, the following assets will not be moving over to Extreme:

  • Brocade’s SDN Controller
  • Network Functions Virtualization (NFV) software and manager (Vyatta)
  • Virtual Application Delivery Controller (ADC)

The price Extreme is paying is a tremendous deal for a business unit that Extreme is expecting to do $230 million in revenue and now puts the company well over a billion dollars making it the largest pure-play networking vendor and the #3 vendor by share to HPE and, of course, Cisco.

Why the deal with Brocade/Broadcom is notable

This deal will be significant to Extreme in a number of ways. First, the Brocade data center business has very little overlap with existing business. Extreme and Avaya Networking sell data center equipment to many enterprises, but not many would be considered the type of organization whose business is the data center. Brocade has many customers where data center performance means everything. These are large universities with networks that power R&D, media companies that are sending massive amount of video over the network, and government institutions. These are all very sophisticated customers with demanding requirements, and they chose Brocade for the quality and performance of products.

Extreme’s customers and resellers should benefit from the strength of the portfolio, as well as the software capabilities. Workflow Composer is an outstanding platform that can automate many of the repetitive tasks in a data center, eliminating the possibility of human error and speeding up provisioning by orders of magnitude.

What’s interesting to note about Zebra, Avaya Networking and Brocade data center is that each of those vendors has core businesses that are not networking but had allocated a significant amount of R&D into building their latest products. The technology from the purchased companies is as good or better than anyone’s, but since networking wasn’t the core of the business, the new products were slow to ramp. So, now Extreme is benefitting from the R&D these companies did with new products that can be used to win customers that they may not have been able to with the existing product line. 

Broadcom benefits, too

For Broadcom, one might look at the purchase price and scratch their heads considering the Wi-Fi and access business is being sold for $800 million to Arris. On the surface, it appears that Extreme is the big winner in this, but in actuality Broadcom benefits, too. Broadcom chips are used in almost every network vendor’s products, and it benefits the company to have larger network vendors that can push one another into adopting the new silicon faster to keep up with the competition. A few larger vendors with more resources are better than a bunch of small ones that can’t absorb new technology too fast. 

Customers of Brocade, Avaya and Extreme should not be concerned, as Extreme isn’t planning any major disruption to products any time soon. Meyercord has repeatedly told me they will do what is best for the customer, and they are committed to that statement for the long haul.

I suspect that Extreme isn’t finished with its M&A activities yet, and I expect that whatever they choose to do next, we will likely consider to be another move that was “better than most,” as great execution is becoming the norm.

Copyright © 2017 IDG Communications, Inc.

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