Acquiring Avaya networking bolsters Extreme plan to take enterprise share from Cisco, HPE

Extreme says it has had a strong reaction from Avaya networking partners, and that they expect the lucrative benefits of the Extreme program as well as the broader portfolio should woo them over.

Norman Rice, Extreme’s EVP of Global Marketing, Supply Chain, & Corporate Development

Extreme Networks’ announcement this week that it has won the bid for Avaya’s networking business marks an important element in the company’s ambitious attempt to position itself as a more attractive alternative to Cisco and HPE in the enterprise market. The United States Bankruptcy Court for the Southern District of New York has approved the sale of the assets of Avaya’s networking business unit to Extreme for approximately $100 million, in accordance with same terms and conditions in the stalking horse agreement between Extreme and Avaya on March 7, 2017. The transaction is expected to close on or shortly after July 1, 2017.

“Our strategy is to take Cisco and HP on in the enterprise,” said Norman Rice, Extreme’s EVP of Global Marketing, Supply Chain, & Corporate Development. “We think the enterprise is transitioning, and we are laser-focused on taking the enterprise.”

Rice’s role at Extreme is Iooking after the company’s strategy, executing on M&As, determining product line management – which products they will build –global marketing, and supply chain, which is how they strategically source the technology. He emphasized the Avaya acquisition’s importance within the context of their overall strategy which includes the recent acquisition of the former Motorola Wireless LAN assets from Zebra, and the pending acquisition of Brocade’s data centre assets.

“We are a software-driven network solutions company, focused on the enterprise,” Rice said. “At the end of October we closed on the acquisition of Zebra’s wireless LAN assets, a business that they inherited when they bought Motorola. That deal doubled to tripled our existing wireless LAN capacity, and we have fully integrated it, ahead of schedule. For the customers and partners involved, being integrated with a pure play networking provider was a very big deal.”

With Avaya, the March 7 agreement meant that anyone else competing against the stalking horse bid would have had to top it by a minimum of 5 per cent. Rice said that while there had been some expressions of interest, ultimately no one chose to do that.

“Avaya was positioned more as a voice solutions provider, but from them we get technology innovation across their switching portfolio, and they just refreshed their next-generation portfolio,” Rice said.

The third acquisition announcement, from March 29, will see Extreme acquire the data centre assets of Brocade, including their switching, routing, and analytics business, from Broadcom after Broadcom’s acquisition of Brocade closes.

Rice said that all three acquisitions were more about acquiring the technology than simply buying share and customers.

“Enhancing our scale with these deals does matter, but so does their technology,” he said “While the Zebra acquisition brings very significant customers like Walmart and FedEx, the technology is very robust and complementary to us. Brocade’s brand new platform went GA in March, and with that we got an outstanding platform for the data centre that’s stronger than what either Extreme or Avaya have.”

The Avaya deal includes all the hardware and software associated with networking including the SDN FX software defined networking fabric. It doesn’t include anything from the voice or contact centre businesses, the two remaining Avaya businesses.

“We are betting on their platform,” Rice said. “We think their fabric and a lot of the things they have done is very innovative. Its elasticity and flexibility are excellent, and it has proven itself. The fabric will extend across the Extreme portfolio, and the Brocade one will have a fabric that will interlock.”

Rice said that the Avaya portfolio is targeted at the same enterprise markets as Extreme, and that it is highly complementary.

“We target many of the same verticals, although Avaya has stronger capabilities in healthcare and public sector than legacy Extreme,” he said. “Their capabilities are extremely complementary, although they OEM their wireless LAN capability and we do not.”

Extreme’s Avaya roadmap will be formally unveiled on June 14, but Rice gave a preview of what it will contain.

“We have been working with the Avaya team the last couple of months, and it will all be business as usual,” he said. “We will support what Avaya has been doing in transferring from legacy to the future. We find that we have been getting three questions. First, will existing investments be protected? Yes, they will. Second, will Avaya warranties be honored? Yes, they will, but the Extreme ones are better. The Avaya ones will be maintained at a minimum, but customers can transition to the better Extreme warranties. The third question is what does the future look like, and we are investing in this and will present the technology roadmap.”

Avaya has had a significant channel of networking partners, with has very little overlap with the Extreme partner base.

“About 70 per cent of their partners who do networking are more UCC, and those will have the opportunity to become Extreme partners and take on a broader portfolio of networking products,” Rice said. “About 30 per cent of them are pure play networking partners. We have found so far that partners are relieved they are going to a pure play networking portfolio, which will mean a broader portfolio for them. The Extreme partner program is one of the most lucrative for networking partners, and we will be offering them that to get them interested in a broader part of the portfolio.”