Now that Extreme Networks has closed its acquisition of Enterasys, it's time to focus on the task at hand as a company twice its previous size.
Both Extreme and Enterasys had annual revenues around $300 million pre-merger. Extreme now has more credibility as a $600 million company with twice the market share in Ethernet switching -- 2.4 percent of the $20 billion worldwide market, good for a No. 4 ranking, according to Dell'Oro Group.
[ETHERNET CONSOLIDATION: Extreme snaps up Enterasys for $180 million]
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Previously, Extreme and Enterasys were well down in the pack, holding 1.1 percent and 1.3 percent respective shares in 2012. With the merger they go from the ranks of Alcatel-Lucent, Avaya and Netgear to Juniper, Huawei, and Dell.
Extreme actually leapfrogs Dell, Brocade, IBM, and DLink in the market share rankings with the Enterasys acquisition, according to Dell'Oro.
"Competing in the switching space as a $300 million company is extremely challenging because you just don't have enough scale to invest in R&D and marketing across the breadth of the product line," said Extreme's new CEO Chuck Berger in an interview with Network World. "Our P&L (profit and loss) wouldn't afford investing in certain product areas. Getting scale and a market share position that gave us credibility was extremely important."
In addition to scale and market share, Extreme inherits a customer base and fills two "very large product gaps very well," Berger says: wireless and network management.
Extreme currently has an OEM arrangement with Motorola for WLAN gear that is less than ideal, according to Berger. Motorola competes with its OEM customers and offers margins that are less appealing than if the customer owned the WLAN product it resells.
Brocade recently ended an arrangement with Motorola, opting instead to resell Aruba WLAN gear.
Enterasys had an OEM relationship with Trapeze Networks before inheriting WLAN access points, switches and controllers through a $550 million joint venture with Siemens Enterprise Communications in 2008.
And Enterasys was always renowned for its network management, secure switching and network access control (NAC) capabilities. Berger was particularly impressed with Enterasys' NetSight network management system, which provides a centralized, policy-based single-pane-of-glass view and control of the wired/wireless campus infrastructure.