Extreme Networks sees the specific subscription model that they offer as unique in the industry, and a real differentiator for them.
Extreme Networks has added another pillar to its strategy, highlighted after the acquisitions of assets from Brocade, Avaya and Zebra, of challenging Cisco in the enterprise networking space. They have announced the formation of Extreme Capital Solutions – formerly the Brocade Network Subscriptions business, that came to Extreme with the acquired Brocade assets. Extreme Capital Solutions includes subscription, capital leasing and usage business models for maximum flexibility, although Extreme is highlighting the subscription option as a real differentiator for them.
“This is a significant part of the enterprise strategy,” said Doug Morgan, Senior Sales Manager at Extreme Capital, who came to Extreme from Brocade along with the entirety of the Brocade financing arm that is now Extreme Capital. “We are the last piece of the puzzle from Brocade, after making sure that all those pieces fit. We are also the big ‘bang for the buck’ that came from Brocade, the captive financing that came to Extreme.”
Brocade’s captive financing arm – a curious industry-standard term which refers to financing offered directly by a vendor – is of particular importance because Extreme had nothing like it previously.
“Before the recent acquisitions, Extreme’s strongest markets were in K-12, and state and local government,” Morgan said. “It was a lot of E-Rate financing [a U.S. federal support program for schools and libraries]. Now Extreme has really branched out into the enterprise with the Avaya and Brocade acquisitions. Much more of the constraint in enterprise is the lack of a capital budget, where an organization is stretched because of funding constraints. This kind of program is much more valuable to the enterprise.”
Morgan said that all enterprise IT vendors have a similar type of in-house financing arm, which he termed as essential for two reasons.
“First, it is specialized in financing a particular manufacturer’s gear,” he said. “Second. It is the most aggressive financing option. Neither third-party financing or distributor financing will be as aggressive as captive financing. In addition, while distributors generally offer financing, it’s a complementary function for them.”
Extreme Capital offers a wide variety of financing options, but Morgan said that the most distinctive is the Extreme Network Subscription.
“This is our slingshot for David to go after Goliath,” he stated. “It’s an innovative flexible offer that allows anything to be acquired, with no term commitment, and with the ability to cancel with 60 days notice. That’s revolutionary in the industry.”
Morgan said that while other vendors have something similar, with Extreme’s program there is no ‘behind the curtain’ penalty for getting out of the deal early.
“The subscription model is completely risk-free for the customer,” he said. “There is no fixed term, or penalty for cancellation, or eligibility to a limited product set. It includes the entire portfolio. The customer can cancel it by part number or in the whole – with no penalty for termination, other than shipping the equipment back. It’s ‘pay as you go,’ with no risk.”
Other financing options include straight leasing, 0 per cent interest financing, and Total Solution Financing, where organizations can fund third-party equipment and services as well as Extreme gear. Two types of compensation plans are available through Extreme partners, including a VAR-enabled MSP model and a traditional resale model.
“This flexibility is great for the MSPs, who can now contract directly with Extreme and their service customers,” Morgan said. “This is also the same as cash to a reseller or MSP. We want to support the channel business as much as we can. These enhancements have been driven by the partner community, and our distribution partners are also looking for us to take things to a higher level.”
Morgan said that while many customers will have no interest in financing, with others it can make the difference in closing a deal.
“It’s not for everybody, but it is another offering from Extreme that differentiates us,” he said. “If customers are looking to have a network for ten years, this isn’t for them. But if they want the option to scale up or down on demand on hardware or software support, that’s a great option for them.”