Extreme Networks bolsters ‘customer intimacy’ to spur growth

CEO Ed Meyercord talks about Enterasys merger and an expanding set of software capabilities undergirding Extreme’s wired-wireless switches

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It’s our view that there’s a lot of confusion about SDN in the market.

I would say that’s true.

There’s a lot of talk about creating an SDN market in the cloud, self-provisioning applications from the cloud.  We’re a lot more practical in our application of SDN.  Our application of SDN is, for example, enabling schools to turn on and off bandwidth in a classroom.  That’s the real application of SDN. 

We’re focused on application delivery from the edge and it’s about how we simplify networking for our customers at the end of the day.  Whether or not that comes from the data center or how that plays out at the edge, it’s about simplification.  Our customers don’t have big IT staffs. We want to make it easy for customers to solve the problems they have around devices on the network and about application delivery.  We have tools that make it simple for them to deliver applications.

At this point is SDN a big customer ask?  Is it driving the market at all?

Not in our market. There is ask around application delivery.  SDN is more of a buzzword that promotes a discussion.  In our market we don’t see people buying SDN.

I want to ask about the recent launch of Extreme Cloud.  Can you explain what that offers customers?  What are the benefits of that?

Almost a year ago we had a customer advisory board meeting and our customers were asking us for ways to deliver new revenue streams.  A big hot button for them was managed services.  The way for us to deliver managed services is through a cloud-managed offering. We have self-provisioning access points which can be deployed and then the AP calls into the cloud and registers.  It makes it easy for partners to manage multiple environments.

At this point is it just wireless environments or is it wired as well?

Wired is coming at the end of June so you’ll have both.  We will also offer flexibility as far as subscription pricing for both.  I think we’ll be the first to have the subscription pricing for the access layer switch. Henry Ford Medical Center has different doctors’ offices that they’d like to deploy, so rather than rolling trucks to manage the network in a remote location, they can deploy our AP that will then call home into the cloud and then they can remote manage from the cloud.  The cloud is really about ease of deployment and speed of deployment, also for our partners, their ability to manage multiple different customers.  We also have a feature that’s different from the rest of the industry which is white labeling, so from a partner perspective you can leverage your own brand using our platform.

And that gives them an ongoing revenue stream as well beyond the initial product sale?

Right, a mostly recurring revenue stream.

Makes sense.  You mentioned the hyperconvergence market.  Do you have a play there?

No.  We really don’t.

By intention?

By intention.  I think there could be partnering opportunities for Extreme and we’re not closed to having discussions.  We could be a part of a hyperconverged environment through an OEM partner.  We have some large partners that are considering us to be part of their solution.  But in terms of our primary focus, our primary focus is on this middle tier enterprise campus.

Is it your sense that in the segment of the market you target hyperconvergence solutions are not as in demand as in other parts?

That’s correct, although there is this emerging private cloud and in a private cloud environment we are very competitive.  We have products that are very competitive in that environment but typically these customers are not buying hyperconverged.

Gartner listed Extreme Networks as a visionary in the Magic Quadrant for wired and wireless LAN access.  What makes you a visionary?

Our software.  Its Extreme management and our control and our analytics and what that allows us to then build for enterprise customers as far as the solutions.

So it’s the combination of capabilities?

It’s the fact that we’re one of two players today that actually has end-to-end wired to wireless.  We’re the only player that has the single pane of glass.  Our service is differentiated.  With our software tools we can create customized solutions that our competitors can’t.

I think this was also in your earnings report where you said currently about 12% of your customers today have a complete solution from you with wired, wireless and software.  Where can you ratchet that up to in, let’s say, the next year? How do you get more customers to have that full solution from the company?

You do a few things.  You upsell your current customers and you make sure your teams are trained and educated and they understand how to sell solutions.  We’ve invested a lot in training and education.  It’s been very effective.  The field has embraced it and our partners are embracing it.  We have training programs for our partners as well. We’ve gone from 10% in Q1 to 15% and now 18% in Q3.

Obviously the Enterasys acquisition has been beneficial to the company. What’s the strategy on future acquisitions? Are there parts of the product line that you need to expand on?

We will be opportunistic, and any kind of strategic opportunity - or what I would call an inorganic growth opportunity - would be one that’s driven by technology, something that’s going to enhance the solution we deliver to the market. It’s going to be something that fits into our customer strategy where we could expand and leverage an existing base of customers.  We will be looking in the growth areas of the market.

This is something I’ve been asking about for years, whether customers will be doing away with more and more of their wired access into the network and becoming essentially wireless enterprises.

We don’t see wired switches going away.  However, we do think that software-driven network solutions will drive hardware sales. Most of our competitors sell point products.  They sell point switches or point APs.  We think the enterprise is shifting toward solutions because they don’t have big IT staffs.  They’re trying to solve problems and if they can have a network partner that’s helping them solve problems and they have software tools that allow them to do that, that that becomes an important part of the sale.  It allows you to then sell a solution at a higher margin and it allows you to pull through the hardware portfolio.

What should people expect from you and the company over the next year?

You should expect to hear a lot more about Extreme.  You referenced the Gartner Magic Quadrant.  Gartner also said we’re the best-kept secret in the industry and a big part of the opportunity for us is to let the genie out of the bottle and make everyone aware of this. 

We’re going to do that by telling our customer story, by having centralized marketing, by creating programs for our partners, educating our partners.  We have an incredible base of customers and we have great people in the company. We’re going to make it a lot easier for partners to sell and a lot easier for our salespeople to sell Extreme.  We’re going to do some very creative things on the marketing side to promote awareness. 

The good news is from where we were a year ago, we’ve got the right team in place, we’ve got complete alignment, we’ve got the most focus the company has had in its history, we have all the product pieces and now we’re investing in designing solutions and then communicating all the solutions and the successes out to the field to create a path of least resistance to have Extreme considered in any kind of a network solution evaluation for enterprise campus customers.

This story, "Extreme Networks bolsters ‘customer intimacy’ to spur growth" was originally published by Network World.

Copyright © 2016 IDG Communications, Inc.

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