The acquisition of Brocade’s data center switching, routing, and analytics business from Broadcom greatly enhances Extreme’s data center technology portfolio, strengthens its go-to-market strategy across target verticals and allows the company to compete effectively in the large enterprise data center. This news, combined with Extreme’s organic investments in R&D and the recent announcements regarding Avaya’s networking business and successful integration of Zebra’s wireless LAN business reinforces Extreme’s corporate strategy of becoming the world’s first end-to-end pure-play enterprise networking company with a focus on customer service and support. We are excited to share more information when the deal closes.
What did Extreme Networks announce today?
A: Extreme announced an agreement with Broadcom to acquire Brocade’s data center networking business for $55 million in cash, consisting of $35 million at closing and $20 million in deferred payments paid quarterly over five years, as well as additional potential performance-based payments to Broadcom, to be paid over a five-year term.
What is the strategic rationale of acquiring Brocade’s data center networking business?
A: The acquisition of Brocade’s data center networking business greatly enhances Extreme’s data center technology portfolio, strengthens our go-to-market in our target verticals of education, hospitality, healthcare, retail, transportation and logistics, manufacturing and government and reinforces Extreme’s strategy of being the only pure-play networking company focused on delivering end-to-end, data center to edge, software-driven solutions. Combined with the Avaya Networking business, assuming Extreme wins this business in Avaya’s bankruptcy process, Extreme is expected to generate over $1 billion in annual revenues.
What exactly is Extreme Networks acquiring?
A: Extreme will acquire all of the assets of Brocade’s recently refreshed high-end data center networking business including data center switching (VDX) and routing (MLX), as well as a new converged switching/routing product line (SLX), in addition to world-class automation and network application visibility software. Brocade’s portfolio enables Extreme to compete in larger enterprise data center opportunities and opens new sales opportunities for the campus/edge network from Brocade’s existing large enterprise data center customers.
How much revenue is this expected to add once closed?
A: Extreme expects annual revenue contribution to be in excess of $230 million.
How would customers and partners benefit from a combined Extreme Networks and Brocade?
Brocade customers and partners:
A: Brocade’s customers and partners will benefit from Extreme being part of a “pure play” networking company with the industry’s only insourced customer service and technical support organization. Extreme will bring its complementary portfolio of core and edge fixed switches, its WLAN portfolio and its high-quality software portfolio of management, control, and analytics platforms that provide visibility and control across the entire enterprise network.
Extreme customers and partners:
A: Extreme’s customers and partners will benefit from the strength of the Brocade data center switching and routing portfolio including its fabric technology and automation software enabling network configuration simplicity. For the more sophisticated data center use cases, the DevOps style data center automation platform from Brocade will provide Extreme customers with flexible network orchestration capabilities. The Brocade acquisition further strengthens Extreme’s software expertise and innovation, enabling customers to have better visibility and control of their network assets from the wireless edge to the campus core and the data center all under one management paradigm.
Does this deal affect the bidding process of Avaya Networking?
A: No. The bidding process for Avaya Networking remains unchanged.
When is the deal expected to close?
A: This deal is expected to close within 60 days of Broadcom closing its Brocade acquisition which is expected to be by the end of July 2017 and is subject to customary closing conditions, including certain regulatory approvals.
How does Brocade fit in Extreme Networks’ business model?
A: Brocade designs, develops and manufactures hardware and software networking solutions for enterprise customers, which is the same as Extreme and Avaya. The solutions are sold along with support and services to enterprise customers, with a focus on data center solutions. The business model is contiguous with that of Extreme and Avaya.
In which vertical markets does Brocade sell to?
A: Brocade sells into the same verticals as Extreme including the federal government, healthcare, and education.
How much will Brocade potentially add to Extreme’s total addressable market?
A: Brocade increases Extreme’s total addressable market size to $12.9 billion, up from $9.4 billion.