Extreme will be celebrating the 4th of July holiday with its latest acquisition, Aerohive. In what seems to be a trend for Extreme, it was able to pick up the company for a good price (especially when compared to other recent WiFi acquisitions). The big difference, however, is that in this case it did not just acquire the assets, but rather the whole company. Translation – this one should be a bit smoother, more predictable and hopefully lacking surprises!
This acquisition is well timed. Why? Because it provides Extreme with a number of key elements (yes, that is a play on Extreme’s Elements campaign) to help it continue to grow, including:
- Cloud management capabilities: This is a big one–with the acquisition, Extreme now has a proven native cloud management platform. Now in its third generation, it leverages agile development process with almost daily updates and has virtually no downtime (seven 9s of availability).
- An opportunity to cross sell into a large customer base: Both companies report having about 30K customers, but the good news for Extreme is that it appears that this acquisition will add approximately 20 to 24 thousand new customers. Given the end-to-end portfolio Extreme has built, this provides a great opportunity to expand.
- SD-Branch opportunity: Also included in this acquisition is SD-WAN technology from Aerohive. Extreme now has all the elements to deliver a unified wired, wireless, and WAN solution for branch and edge locations. Given the increased complexity most IT operations teams are facing, providing simplified management should be welcomed by most customers. It also provides an opportunity to build out an ecosystem of partners for the branch – think security and cloud.
- Ability to offer choice for the WiFi6 transition. Combined with its existing WiFi solutions, Extreme will be able to offer organizations a choice of cloud or on-premises management for its wireless solutions. This flexibility is well timed given the expected transition to WiFi6 technology this year and in the future.
- Expanding its position in key verticals. Specifically, Extreme expects the acquisition will give them roughly 30% of the education vertical – with both companies demonstrating significant growth in this market over last year. Other verticals that will benefit should include retail, healthcare, and banking.
If you have been following Extreme for a while, it is clear that it is continuing to execute against its plan to scale the business. In addition to the earlier acquisitions, the company has also worked to improve its internal processes, embarking on its own Digital Transformation initiative and improving its go-to-market capabilities, to better position it to scale (to the next billion). The acquisition of Aerohive provides a number of synergies (outlined above) and provides Extreme with another opportunity to scale the business. Clearly, there are always risks and work to do with any acquisition, but Extreme is well aware of the pitfalls and what needs to be done to educate sales and partners.
