Extreme Networks has in recent months restyled the company with data-center networking technology acquisitions and upgrades, but now comes the hard part – executing with enterprise customers and effectively competing with the likes of Cisco, VMware, Arista, Juniper, HPE and others.
The company’s latest and perhaps most significant long-term move was closing the acquisition of wireless-networking vendor Aerohive for about $210 million. The deal brings Extreme Aerohive’s wireless-networking technology – including its WiFi 6 gear, SD-WAN software and cloud-management services.
With the Aerohive technology, Extreme says customers and partners will be able to mix and match a broader array of software, hardware, and services to create networks that support their unique needs, and that can be managed and automated from the enterprise edge to the cloud.
The Aerohive buy is just the latest in a string of acquisitions that have reshaped the company. In the past few years the company has acquired networking and data-center technology from Avaya and Brocade, and it bought wireless player Zebra Technologies in 2016 for $55 million.
While it has been a battle to integrate and get solid sales footing for those acquisitions – particularly Brocade and Avaya, the company says those challenges are behind it and that the Aerohive integration will be much smoother.
“After scaling Extreme’s business to $1B in revenue [for FY 2019, which ended in June] 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 Extreme CEO Ed Meyercord at the firm’s FY 19 financial analysts call.
The strategy to move more toward a software-oriented, cloud-based revenue generation and technology development is brand new for Extreme. The company says it expects to generate as much as 30 percent of revenues from recurring charges in the near future. The tactic was enabled in large part by the Aerohive buy, which doubled Extreme’s customer based to 60,000 and its sales partners to 11,000 and whose revenues are recurring and cloud-based. The acquisition also created the number-three enterprise Wireless LAN company behind Cisco and HPE/Aruba.
“We are going to take this Aerohive system and expand across our entire portfolio and use it to deliver common, simplified software with feature packages for on-premises or in-cloud based on customers’ use case,” added Norman Rice, Extreme’s Chief Marketing, Development and Product Operations Officer. “We have never really been in any cloud conversations before so for us this will be a major add.”
Indeed, the Aerohive move is key for the company’s future, analysts say.
