Extreme Networks Buys Enterasys for $180M

Networking hardware and network-automation vendor Extreme Networks doubled its share of the $42 billion global networking equipment market today by acquiring a networking vendor of similar size and similar outlook on how to survive in a market dominated by Cisco Systems.

Extreme announced Sept. 12 it will pay $180 million to acquire Enterasys – a combination that boosts the market share of the combined company to about 3 percent while merging two very different customer bases and sets of technical capabilities, according to Zeus Kerravala, founder and principal analyst at ZK Research.

The acquisition makes sense from a business perspective because it gives Extreme the Enterasys revenue stream of about $300 million per year for a price far less than that, Kerravala said. It also reinforces the weak spots in each vendor’s lineup: Enterasys’ respected lineup of security products will bolster Extreme’s complete lack of security; Enterasys extensive wireless portfolio should let Extreme stop relying on hardware OEM’ed from Motorola for wireless networking products to sell, Kerravala wrote in a blog about the acquisition.

There is more overlap in switching products at both the campus- and datacenter levels of the network, Kerravala added.

There is also a definite overlap in Enterasys’ OneFabric datacenter mesh-network interconnect product, which, combined with the Data Center Manager software, is designed to automate provisioning and management of both real and virtual networks within the datacenter.

Extreme’s version of the same pairing is its Open Fabric architecture, which connects the hardware and ExtremeXOS, the software designed to manage identity management, automation, provisioning, monitoring and configuration.

Both companies call their management and automation products a step toward Software Defined Networking (SDN) and identified full-featured SDN as a strategic direction to help them compete with Cisco and its proprietary-hardware-based approach to virtualized networks.

Following the acquisition, Extreme Networks will continue to support the products of each company separately, but combine them into more complete packages as well.

Enterasys’ IdentiFi WLAN products will take over much of the wireless-network load for Extreme. Enterasys NetSight network management software will get the ability to control Extreme hardware.

Extreme’s XOS management- and network-operations system will become the combined companies’ primary management product with enhancements to support all the products of each company within 18 to 30 months, according to information from Extreme.

Enterasys CEO Chris Crowell will become a senior executive at Extreme; Extreme CEO Chuck Berger will keep the top spot at the combined organization.


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