Extreme Networks' Aerohive Acquisition Adds Cloud Clout

As the cloud managed networking space heats up, Extreme Networks on Wednesday said it has signed a definitive agreement to acquire Aerohive Networks in deal worth approximately $272 million.

Since the vendor’s restructuring in 2015 and under the current management team, this is Extreme’s fourth acquisition — the other three are Zebra Technologies, Avaya’s networking business, and Brocade’s switching, routing and analytics business.

As Extreme undergoes its own digital transformation, the company saw that the next step was to add a cloud management capability. Extreme has its own cloud offering, Extreme Cloud, but Aerohive gives it a more fully featured offering.

Extreme Networks’ Norman Rice

“There is a big demand [for cloud-managed capability] from our partners and customers to make them more competitive,” Norman Rice, chief marketing development and products operations officer at Extreme Networks, told Channel Partners. “Additionally, [Aerohive] complements our existing wireless solutions, our on-premises management across the portfolio, and it’s management that was born in the cloud.”

Founded in 2006, Aerohive is a pioneer in cloud-managed networking. The vendor offers controllerless Wi-Fi and cloud network management, including cloud-managed Wi-Fi and network access control (NAC). The company has about 30,000 cloud wireless LAN customers globally, in verticals including education, health care, state and local government, and retail. Rice says the acquisition will add about 20,000-24,000 net new customers to its customer base and new areas of exposure in Aerohive markets.

Andrew Lerner, vice president and analyst at Gartner, said that Aerohive’s installed customer base is a key strategic piece of Extreme’s acquisition,

“This is consistent and aligned with Extreme’s strategy to grow via acquisition of networking companies,” he said.

Extreme’s acquisition of Aerohive gives it a stronger cloud managed offering,” Brandon Butler, senior research analyst at IDC told Channel Partners. “And, I think that’s the big message here — the commentary around the growing interest among enterprises in having a cloud managed networking platform, particularly for their enterprise Wi-Fi.”

This growing interest has mushroomed over the past couple of years, with the research firm expecting that 25% of enterprise wireless LAN market revenues are derived from cloud-based offerings. IDC expects that to grow to 40 percent over the next five years.

The other component of the acquisition is that Aerohive has SD-WAN.

IDC’s Brandon Butler

“That’s something that Extreme did not really have before today,” said Butler.

He adds that Aerohive isn’t seen as a major player in the SD-WAN market, but teaming up with Extreme expands the opportunity to more aggressively pursue the market.

Extreme will add about 5,600 Aerohive partners to its base of 6,000 when the deal closes, likely in August.

Rice says Aerohive partners benefit from the scale of Extreme’s portfolio, including an on-premises wired solution, full complement of access layers such as Smart OmniEdge, a fully automated campus technology, and agile data center.

“It gives Aerohive partners a much broader portfolio for on-premises software and applications, as well as the entire complement of switching, and wired and wireless LANs,” he said.

Rice noted that both Extreme and Aerohive partners can sign up for the other vendor’s independent partner programs to get a jump-start on education and training to sell products.

The move by Extreme Networks comes just months after Juniper Networks’ acquisition of Mist Systems, a vendor that also has a …

… cloud-managed network offering. A key difference in the acquisitions is that Juniper didn’t have a strong wireless offering, so the Mist acquisition helps it get into wireless LANs.

With the Mist acquisition, Juniper and Extreme are more positioned as competitors because now they’re both competing in the campus space.

“They also compete in the data center side — both vendors have a series of switches. But Juniper’s strength is really more on the routing side and they have a big service provider business. Extreme is more focused on the enterprise,” said Butler.

He noted, however, that cloud-managed offerings present a good opportunity for all partners to resell these platforms because of advantages such as easier rollout and day-two management, faster access to new features and functionality.

From an organizational perspective, Rice said that the company’s intent is to embrace Aerohive’s born-in-the-cloud heritage, not break it up — and put into Extreme’s mold.

“There are many things that we can learn and adopt from them so that we can become a more formidable partner and competitor in the marketplace,” he said.