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Extreme targets cloud services, SD-WAN, WiFi 6 with $210M Aerohive grab

News Analysis
Jun 26, 20195 mins

Extreme buys Aerohive’s wireless networking technology – including its new WiFi 6 gear – SD-WAN software and cloud-management services.

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Extreme Networks opened the checkbook again this week to the tune of $210 million for wireless-networking vendor Aerohive.

The move will bring to Extreme Aerohive’s wireless-networking technology – including its new WiFi 6 gear, SD-WAN software and cloud-management services. 

Gartner wrote, “Aerohive’s wireless-focused access-network portfolio comprises stand-alone and stackable campus switches, access points and branch-office routers, with a cloud-managed distributed control architecture. Organizations typically employ Aerohive’s HiveManager network management platform [which manages Wi-Fi, Switching, SD-WAN, and NAC] as a public or private cloud, although it also may be deployed on-premises. To manage a multivendor unified access network, the enterprise can use HiveManager to configure, provision and monitor Aerohive APs in conjunction with switches from Aerohive or with N-Series switches from OEM partner Dell EMC.” The company also has a relationship with Juniper to managed wired devices.

In addition the company has an SD-WAN offering that can be managed through HiveManager, letting customers manage wired and wireless wide area network. On the SD-WAN technology Extreme said it is “investigating roadmap and strategy opportunities and will continue to update this plan as the companies integrate over the next few months.”

“In the case of SD-WAN, we really look at SD-WAN as SD branch. There’s a branch router and capability that Aerohive brings to the equation here, which is something where we feel we have pent-up demand. There is a lot of opportunities where we have not been in a strong competitive position to compete and now we will be,” said Ed Meyercord, President and CEO of Extreme Networks.  “We’re not really looking at from a traditional SD-WAN perspective, we’re really looking at the branch capabilities and how we’re going to be able to deliver on this with our customers.”

Extreme said that Aerohive recently introduced a  trio of Wi-Fi 6 access points, along with a pluggable access point. “Aerohive has a global footprint of 30,000 cloud wireless LAN customers in verticals including education, healthcare, state and local government, and retail,” Extreme stated.  This acquisition will bring new automation and intelligence capabilities to Extreme’s Elements portfolio.

Extreme Elements is a menu of the company’s new and existing Smart OmniEdge, Automated Campus and Agile Data Center software, hardware and services that customers can order to build a manageable, secure system.  Aside from the applications, the Elements include Extreme Management Center, the company’s network management software; the company’s x86-based intelligent appliances, including the ExtremeCloud Appliance; and ExtremeSwitching X465 premium, a stackable multi-rate gigabit Ethernet switch.

How all of the is integrated into the Extreme family of wired and wireless switches remains to be seen, especially as Extreme has a variety of wireless  products of its own, obtained via its buy of Zebra Technologies  in 2016.  Since then Extreme has also bought Brocade Communications for its data center technology and Avaya for expanding its networking hardware and software offerings.

From the Extreme viewpoint, the company said Aerohive will bring customers more choices for cloud and on-premises wired  and  wireless  offerings.  “Post-acquisition, customers and partners will be able to mix and match a broader array of software, hardware, and services Elements to create networks that support their unique needs, and that can be managed and automated from end-to-end, from the enterprise edge to the cloud, to advance their digital transformation efforts,” Extreme stated.

“After scaling Extreme’s business to $1B in revenue and expanding our portfolio to include end-to-end enterprise networking solutions, we are now taking the next step to transform our business to add sustainable, subscription-oriented cloud-based solutions that will enable us to drive recurring revenue and improved cash flow generation,” said Meyercord.

In a letter to Aerohive customers, Meyercord wrote: “Aerohive has the most advanced cloud-based network management and wireless networking platform in the industry, providing secure and robust coverage to large enterprises with some of the most sprawling, complex operations. We will have the industry’s largest cloud and data footprint with over 10,000 customer data sets that will allow us to optimize performance with the industry’s leading artificial intelligence and machine learning capabilities. In addition, we will be adding cloud-based network access control capabilities and software-defined WAN solutions.”

“There’s been collaboration with the executive leadership team at Aerohive in identifying Extreme assets, Aerohive assets in the best way for us to bring them together. The one point that I want to make is that we are absolutely going to continue to invest in their cloud-management platform, and bringing over the agile team and the DevOps operation for running that cloud is going to be a critical capability for us,” Meyercord said.

Combined, the two companies rank third in the  campus networking market (both wired Ethernet and Wireless LAN), following Cisco and HPE, and fifth place including Chinese manufacturers H3C and Huawei. Combined, the two companies captured a 3 percent revenue-share of the $22 billion-market sales during 2018, said Tam Dell’Oro, founder and CEO of the Dell’Oro Group.

Dell’ Oro says the benefits of the Extreme and Aerohive combination include the fact that Extreme will bring a broader Ethernet switch portfolio to Aerohive customers looking to refresh both wired and wireless networks. On the Aerohive side, the company  brings cloud-management expertise, sophisticated wireless technology, and a very loyal customer base. 

“A core competency that sets both Extreme and Aerohive apart is their highly sophisticated reseller partners that specialize in the applications end users operate over their networks. Finding and cultivating these specialist reseller partners takes years,” Dell’Oro stated.

On the downside, “This will be Extreme’s third acquisition in three years (i.e., Zebra, Brocade, Avaya, respectively), requiring operations and product consolidation, an upheaval to any business. Supporting and transitioning customers’ installed equipment will require significant effort,” Dell’Oro stated.

The acquisition is expected to close in the first quarter of Extreme’s 2020 fiscal year.