Extreme Networks is coming for Cisco, HPE market share

Extreme Networks is angling for a coup in the enterprise networking sector, waging war against entrenched incumbents Cisco, HPE and Juniper. Already, it’s making significant progress despite fighting on a pitched battlefield of enterprise inertia. But it has a secret weapon up its sleeve: new talent recruited from its rivals who know the chinks in their armor.

CEO Ed Meyercord told Fierce Telecom that over the past 12 months Extreme has hired some 650 people to support its growth. About a third of those came from the company’s major competitors.

“We are able to hire the best of the best,” he said “They kind of know where bodies are buried and they see a lot of opportunity. So, I would say the human talent that we’re attracting at Extreme is going to help us with this flywheel [of growth].”

Extreme Networks provides a range of wireless and wired networking solutions, all of which are underpinned by a cloud-based management platform and billed using a subscription model. Meyercord said the idea was to create an end-to-end offering with simplicity at its core. Using Extreme’s cloud platform, customers can manage not only Extreme’s networking hardware (think core network switches and fixed and Wi-Fi access points) but also that of its competitors.

Meyercord said Extreme’s model stands in stark contrast to that of its rivals. He specifically called out Cisco, noting customers have become frustrated by a lack of interoperability between some of its product sets, such as Meraki and the Cisco’s Catalyst DNA software.

“People are really fed up with what’s going on,” Meyercord said.

According to Meyercord, third party metrics show that Cisco currently owns about 60% of the enterprise networking market, with HPE at 15% and Juniper at 6-7%. Extreme Networks is currently on par with Juniper in terms of market share, but is increasingly snagging business from Cisco and HPE, he added.

“The big challenge Cisco has is they are the most complicated to deal with,” he said. “They’ve never integrated an acquisition, so all this is playing out with the customer.” HPE, meanwhile, found its success with its Aruba division but has increasingly focused on its GreenLake cloud platform after losing key executives in 2020 and 2021.

For its part, a Cisco spokesperson said in a statement to Fierce that "we don’t force our customers into a specific management platform." The spokesperson added "We now offer our customers unified hardware between Catalyst and Meraki – the same hardware across both product lines with the choice of management platform. We also have introduced the ability to manage Catalyst hardware via the Meraki platform...In the 12+ months since introducing converged solutions across Catalyst and Meraki, we've seen impressive adoption and excitement from customers."

Still, Extreme has capitalized on its rivals vulnerabilities, inking deals with major players across verticals. These include contracts in the manufacturing space with Volkswagen and Samsung, in the enterprise realm with FedEx, NHS Trust hospitals on the healthcare front and Kroger in retail.

Dell'Oro Group Research Director Siân Morgan told Fierce Telecom that even small share gains for a company in Extreme's position can have a big impact on revenue. "The combined campus switch and WLAN market is expected to be $32 Billion in 2023. A 1% gain in market share would boost Extreme’s FY revenues by over 20%," she explained.

She added Extreme has traditionally "outperformed" in the education sector as well as in the sports and entertainment realm. Its recent Kroger win "especially given that it’s a huge retail customer signing on to a cloud-based solution, has shone a new light on Extreme’s potential in other verticals," she said.

Morgan also noted that Extreme’s subscription revenue in the public-cloud managed WLAN market "has outpaced the market, in terms of Y/Y growth, every quarter for the past two years. This success makes their strategy to expand their subscription model to their entire portfolio all the more compelling."

Looking ahead

Meyercord said Extreme has doubled down on efforts to go after larger contracts and in its fiscal Q4 2023 (ended June 30) recorded 30% growth in deals valued at over $1 million. It is also working to shore up its presence in the government space, Meyercord said, by renewing its federal security certifications to open up large opportunities in that space.

Over the next 12 months, Meyercord said Extreme is planning to come out with a new security product and will also unveil a collaboration with Microsoft geared around security.

In terms of hurdles, the CEO said Extreme’s biggest challenge right now is building brand recognition and upleveling its presence in sales channels. Inertia is another major obstacle.

“When we have a level playing field on the merits of our technology, our solution and the value that we bring to customers, we have a fantastic batting average. When we’re trying to break through the channel, let’s say to an entrenched Cisco account, inertia is our biggest challenge. It’s the network relationship that’s based on a golf game that’s been in place for 10 years. I’d say that’s the biggest challenge,” he concluded.

Still, Extreme isn’t hurting. In the recent quarter, the company revenue rose 31% to $363.9 million, with net incoming jumping $20 million to $25.4 million.