Extremely Hive Minded

I must admit that I was wrong. After almost six years, I was mistake about who would end up buying Aerohive. You may recall back in 2013 I made a prediction that Aerohive would end up being bought by Dell. I recall it frequently because quite a few people still point out that post and wonder what if it’s happened yet.

Alas, June 26, 2019 is the date when I was finally proven wrong when Extreme Networks announced plans to purchase Aerohive for $4.45/share, which equates to around $272 million paid, which will be adjust for some cash on hand. Aerohive is the latest addition to the Extreme portfolio, which now includes pieces of Brocade, Avaya, Enterasys, and Motorola/Zebra.

Why did Extreme buy Aerohive? I know that several people in the industry told me they called this months ago, but that doesn’t explain the reasoning behind spending almost $300 million right before the end of the fiscal year. What was the draw that have Extreme buzzing about this particular company?

Flying Through The Clouds

The most apparent answer is HiveManager. Why? Because it’s really the only thing unique to Aerohive that Extreme really didn’t have already. Aerohive’s APs aren’t custom built. Aerohive’s switching line was rebadged from an ODM in order to meet the requirements to be included in Gartner’s Wired and Wireless Magic Quadrant. So the real draw was the software. The cloud management platform that Aerohive has pushed as their crown jewel for a number of years.

I’ll admit that HiveManager is a very nice piece of management software. It’s easy to use and has a lot of power behind the scenes. It’s also capable of being tuned for very specific vertical requirements, such as education. You can set up self-service portals and Private Pre-Shared Keys (PPSKs) fairly easily for your users. You can also build a lot of policy around the pieces of your network, both hardware and users. That’s a place to start your journey.

Why? Because Extreme is all about Automation! I talked to their team a few weeks ago and the story was all about building automation platforms. Extreme wants to have systems that are highly integrated and capable of doing things to make life easier for administrators. That means having the control pieces in place. And I’m not sure if what Extreme had already was in the same league as HiveManager. But I doubt Extreme has put as much effort into their software yet as Aerohive had invested in theirs over the past 8 years.

For Extreme to really build out the edge network of the future, they need to have a cloud-based management system that has easy policy creation and can be extended to include not only wireless access points but wired switches and other data center automation. If you look at what is happening with intent-based networking from other networking companies, you know how important policy definition is to the schema of your network going forward. In order to get that policy engine up and running quickly to feed the automation engine, Extreme made the call to buy it.

Part of the Colony

More importantly than the software piece, to me at least, is the people. Sure, you can have a bunch of people hacking away at code for a lot of hours to build something great. You can even choose to buy that something great from someone else and just start modifying it to your needs. Extreme knew that adapting HiveManager to fulfill the needs of their platform wasn’t going to be a walk in the park. So bringing the Aerohive team on board makes the most sense to me.

But it’s also important to realize who had a big hand in making the call. Abby Strong (@WiFi_Princess) is the VP of Product Marketing at Extreme. Before that she held the same role at Aerohive in some fashion for a number of years. She drove Aerohive to where they were before moving over to Extreme to do something similar.

When you’re building a team, how do you do it? Do you run out and find random people that you think are the best for the job and hope they gel quickly? Do you just throw darts at a stack of resumes and hope random chance favors your bold strategy? Or do you look at existing teams that work well together and can pull off amazing feats of technical talent with the right motivation? I’d say the third option is the most successful, wouldn’t you?

It’s not unheard of in the wireless industry for an entire team to move back and forth between companies. There’s a hospitality team that’s moved back and forth between Ruckus, Aerohive, and Ubiquiti. There are other teams, like some working on 802.11u, that bounced around a couple of times before they found a home. Which makes me wonder if Extreme bought Aerohive for HiveManager and ended up with the development team as a bonus? Or if they decided to buy the development team and got the software for “free”?


Tom’s Take

We all knew Aerohive was putting itself on the market. You don’t shed sales staff and middle management unless you’re making yourself a very attractive target for acquisition. I still held out hope that maybe Dell would come through for me and make my five-year-old prediction prescient. Instead, the right company snapped up Aerohive for next to nothing and will start in earnest integrating HiveManager into their stack in the coming months. I don’t know what the future plans for further integration look like, but the wireless world is buzzing right now and that should make life extremely sweet for the Aerohive team.

Extreme-ly Interesting Times In Networking

If you’re a fan of Extreme Networks, the last few months have been pretty exciting for you. Just yesterday, it was announced that Extreme is buying the data center networking business of Brocade for $55 million once the Broadcom acquisition happens. Combined with the $100 million acquisition of Avaya’s campus networking portfolio on March 7th and the purchase of Zebra Wireless (nee Motorola) last September, Extreme is pushing itself into the market as a major player. How is that going to impact the landscape?

Building A Better Business

Extreme has been a player in the wireless space for a while. Their acquisition of Enterasys helped vault them into the mix with other big wireless players. Now, the rounding out of the portfolio helps them complete across the board. They aren’t just limited to playing with stadium wifi and campus technologies now. The campus networking story that was brought in through Avaya was a must to help them compete with Aruba, A Hewlett Packard Enterprise Company. Aruba owns the assets of HPE’s campus networking business and has been leveraging them effectively.

The data center play was an interesting one to say the least. I’ve mused recently that Brocade’s data center business may end up lying fallow once Arris grabbed Ruckus. Brocade had some credibility in very large networks through VCS and the MLX router series, but outside of the education market and specialized SDN deployments it was rare to encounter them. Arista has really dug into Cisco’s market share here and the rest of the players seem to be content to wait out that battle. Juniper is back in the carrier business, and the rest seem to be focusing now on OCP and the pieces that flow logically from that, such as Six Pack, Backpack, and Whatever Facebook Thinks The Next Fast Switch Should Be Called That Ends In “Pack”.

Seeing Extreme come from nowhere to snap up the data center line from Brocade signals a new entrant into the data center crowd. Imagine, if you will, a mosh pit. Lots of people fighting for their own space to do their thing. Two people in the middle have decided to have an all-out fight over their space. Meanwhile, everyone else is standing around watching them. Finally, a new person enters the void of battle to do their thing on the side away from the fistfight that has captured everyone’s attention. This is where Extreme finds itself now.

Not Too Extreme

The key for Extreme now is to tell the “Full Stack” story to customers. Whereas before they had to hand off the high end to another “frenemy” and hope that it didn’t come back to bite them, now Extreme can sell all the way up and down the stack. They have some interesting ideas about SDN that will bear some watching as they begin to build them into their stack. The integration of VCS into their portfolio will take some time, as the way that Brocade does their fabric implementation is a bit different than the rest of the world.

This is also a warning call for the rest of the industry. It’s time to get off the sidelines and choose your position. Arista and Cisco won’t be fighting forever. Cisco is also reportedly looking to create a new OS to bring some functionality to older devices. That means that they can continue and try to innovate while fighting against their competitors. The winner of the Cisco and Arista battle is inconsequential to the rest of the industry right now. Either Arista will be wiped off the map and a stronger Cisco will pick a new enemy, or Arista will hurt Cisco and pull even with them in the data center market, leaving more market share for others to gobble up.

Extreme stands a very good chance of picking up customers with their approach. Customers that wouldn’t have considered them in the past will be lining up to see how Avaya campus gear will integrate with Enterasys wireless and Brocade data center gear. It’s not all the different from the hodge-podge approach that many companies have picked for years to lower costs and avoid having a single vendor solution. Now, those lower cost options are available in a single line of purple boxes.


Tom’s Take

Who knew we were going to get a new entrant into the Networking Wars for the tidy sum of $155 million? Feels like it should have cost more than that, but given the number of people holding fire sales to get rid of things they have to divest before pending acquisition or pending dissolution, it really doesn’t come as much surprise. Someone had to buy these pieces and put them together. I think Extreme is going to turn some heads and make some for some interesting conversations in the next few months. Don’t count them out just yet.