EXTREME FACES CHALLENGES, GIRDS FOR FUTURE NETWORKING BATTLES
Extreme Networks is contending for greater influence from the data center to the network edge, but it has some obstacles to overcome.
The company is still grappling with how to best integrate, use and effectively sell the technologies it has acquired from Avaya and Brocade in the past year, as well as incorporate and develop its own products to do battle in the cloud, mobile and edge computing environments of the future. Remember, too, that Extreme bought wireless player Zebra Technologies in 2016 for $55 million.
In terms of results that Wall Street watches, Extreme Networks grew revenue 76% to $262 million in its recent fiscal third quarter. According to Extreme, those gains were fueled mostly by growth from its acquisitions and around an 8% growth in its own products.
Analyst expectations were higher about – $266 million – so there was some stock market consternation earlier this year. There have been some layoffsat the company, but most experts say integrating the technologies Extreme has purchased in the past two years is no small feat, and they expect the network vendor to continue growing.
Campus switching, wireless management
Extreme CEO Ed Meyercord thinks so, as well, telling analysts on the firm’s most recent earnings call: “Combining Avaya’s differentiated fabric technology with Extreme’s full suite of software and competitive wireless, continues to yield dividends from a cross-selling perspective. We are now rebuilding our pipeline of business in our Avaya campus business, which is being generated by strong demand for our fabric solution.”
He says the Layer 2 fabric is easy to deploy and enables segmenting networks for better security, which is stimulatingn demand. “We continue to target a $200 million annual run rate in Q4 and growth in fiscal 2019 at a higher gross margin level than what we saw in Q3,” Meyercord said.
Key to customer acceptance and future growth Extreme recently took the wraps off a number of new products that represent its first rollout that featured technologies from its newly integrated roster including wired, wireless, network management, cloud, analytics and security.
Customers need to protect and advance their edge networks, and there has been no path to protect and manage this vital environment, says Mike Leibovitz, director of mobility solutions at Extreme. The network edge is where mobile transactions, management and connection of IoT devices occur. It is the first line of defense against cyberattacks where multiple connectivity technologies come together across various locations and deployment situations.
Extreme debuts Smart OmniEdge for Wi-Fi, switching
And that’s where the company’s Smart OmniEdge suite of products promises to improve the management, policy setting and security of customers’ edge network environments, Leibovitz says.
The Smart OmniEdge family includes:
- ExtremeAI for Smart OmniEdge – A hosted application for Wi-Fi environments that uses machine learning to collect network analytics, device statistics, connection rates, and user and application experience characteristics. This lets the network constantly learn and adapt to a customer’s clients and applications accessing the Wi-Fi network, Extreme said.
- ExtremeCloud Appliance – The on-premises appliance delivers cloud-like licensing and management with integrated services and is container ready for operational expansion, Extreme stated. It is also available as a virtual machine (VM) for customers that have their own private-cloud services.
- Extreme Extended Edge Switching – Software for Extreme’s family of switches that lets customers collapse multiple network layers into a single logical switch. The idea is to enhance edge switch intelligence, flatten the network and ultimately cut costs, the company said.
- Extreme Defender for IoT – The Defender for IoT application can be deployed on the ExtremeCloud Appliance in any form factor and used to help ensure secure access of IoT devices plugged into the wall jack AP or the Extreme Defender Adaptor. The application lets IT administrators analyze traffic flows and pinpoint anomalies. The application works with the Extreme Fabric Connect infrastructure or over third-party networks to protect IoT devices, and is ideal for healthcare environments, the company said.
One of the key take-aways from the announcement is that OmniEdge and the company’s Extreme Management Center give users options of managing wireless environments from the same pane of glass as they manage their traditionally wired networks, Leibovitz says. From a competitive standpoint no one else offers that capability, he says.
Certainly, how Extreme views the competition in the enterprise network world is different.
All eyes on Cisco, HP Aruba, Juniper
“Cisco’s philosophy is the intelligence traditionally lived in the core, you know, which is really their strength, the Nexus platforms. And then they make decisions and sort of proliferate it out to the edge. HP Aruba, built their networking strength around making those decisions at the access layer, where Aruba came from. And then the intelligence sort of flows in through the rest of the network and sort of dies out by the time it gets to the core,” Norman Rice chief marketing, development and product operations officer of Extreme, said in an interview.
“When you look at us, we look at that problem differently. We think that the intelligence lives in our management software suite,” Rice says. “The core strength of Extreme is around automation, simplicity and being able to put policy and controls into the hands of a manager or operator and being able to push those out in an automated way so that they can scale and manage more efficiently,” Rice says.
Rice said Extreme’s new direction is reflective of an evolving network environment.
“Look at the fact that we’ll see something like a billion new 5G devices alone coming onto networks in the next five years and the complexity that will introduce. The networking industry has been stagnant the last few years, and because of IoT, because of the proliferation of information and devices and the amount of content and information flying around is going to change things. The network is becoming more of a mesh of devices,” Rice says. “We’ve tried to create a lot of flexibility and services that our customers can utilize to grow with these changes.”
So, can Extreme’s updated strategy and differentiation attract more enterprise customers?
In terms of switching gear the company does not exactly start from a position of strength. According to Dell Oro, the company had only 1.2-1.5% of the total switching market in 2017.
“One of the keys for Extreme is to move past this transition period where it is integrating all of its newly acquired technologies – Avaya, Zebra and Brocade and execute on their plans,” says Sameh Boujelbene, senior director at Dell’Oro Group.
The company is strong among small-to-medium sized customers with education, retail and hospitals being some Extreme’s biggest customers, Boujelbene said.
SD-WAN, intent-based networking hotness
“It definitely is a good time for new technologies to hit the network market as wireless and wired networks, especially in the markets Extreme is strong in, are ripe for technology refreshment,” Boujelbene says.
Keep in mind that competitors such as HPE, Arista, Dell – not to mention Cisco, which dominates networking sales – all have their eyes on this end of the market, too, Boujelbene added.
“Extreme has a strong story when it comes to its unified management offering, but it is in a very competitive market,” she said.
Brandon Butler, a senior research analyst with IDC, went a step further, saying, “Given Extreme’s presence in the enterprise branch, the company could strengthen its WAN (and SD-WAN) partnerships, given that cloud and SaaS app consumption in the enterprise continues to rise. Extreme is one of many companies that has built a robust network management software, which the company could more closely associate with the burgeoning intent-based networking (IBN) technology transition.”
IDC believes that IBN represents the next major advance of integrated visibility, automation and assurance into network management, and Extreme has many of the components important to IBN deployment.
“Overall, Extreme has assembled a competitive portfolio of network solutions. It now needs to integrate those into a cohesive network portfolio and leverage it to expand into new market segments,” Butler says.