It’s not at all uncommon for competitors to snipe at one another but it still makes for good reading and it provides an interesting look into a company’s strategy – and perhaps a signal to a competitor they are in for a fight.
Today’s round comes from Juniper which has a piece of marketing out there that says: “In March 2017, Extreme Networks announced it will acquire Brocade’s data center networking business. This acquisition has hindered Brocade/Extreme’s ability to meet your long-term goals. They can no longer deliver networking solutions that will help you embark on your digital transformation journey. Juniper Networks can.”
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Extreme has been on a roll. Not only did it say it was going to buy Brocade’s data center business, it also said in March it was buying up the network technology of Avaya Holdings– which is in Chapter 11 bankruptcy — for $100 million.
Extreme’s Ed Meyercord, President and CEO said he expects the Avaya deal will broaden the company’s software and strengthen its presence in vertical markets such as healthcare and manufacturing. “We expect the Avaya business to generate over $200 million in annual revenue, increase our market share and offer new opportunities for our customers. Although our agreement is subject to required approvals, the timing of which is uncertain, we expect the combined businesses can achieve synergies and provide accretion to Extreme’s fiscal 2018 earnings and cash flow.”
In the end, Extreme said it expects the deals to push its revenues to over $1 billion for its Fiscal 2018 year which begins July 1.
Indeed, both deals, if all pans out, will require integration and possibly some elimination of product – though the company has not laid out any technology roadmap yet.
It is at this junction where competitors being to circle a little more intently. Thus, recently Mike Marcellin Juniper’s senior vice president and Chief Marketing Officer wrote in a blog post:
“In the high-tech vendor world, oftentimes acquisitions can be exciting for customers. When related technologies come together, it can create unique opportunities to blend products, simplify procurement, and collapse support and services contracts under a single supplier. But when assets are sold under duress, the outcomes can be more uncertain.
As most of you know, Broadcom entered into an agreement to purchase Brocade for $5.9B. And just a few weeks ago, Broadcom has announced that it has reached a deal to sell Brocade’s data center routing and switching business to Extreme for $55M. Extreme has actually been on a bit of a buying spree lately. In early March, they announced their intent to acquire part of Avaya’s troubled business for $100M. And, shortly before that, Extreme agreed to purchase Zebra’s WLAN business for $55M. And now they’re buying Brocade’s data center business, which includes the Foundry assets that were acquired for $3B in 2008. The fact that the deal also includes subsequent Vistapoint and StackStorm acquisitions, all at less than 2% of the original Foundry price, suggests that this was a sale under duress, as well. How will Extreme integrate three acquisitions at once? Marcellin stated.
“If the development teams are impacted by any right-sizing, the question for many former and current Brocade customers is this: has the roadmap shifted from promise to compromise? At best, managing a trio of complex integrations is extremely complicated. More likely, I suspect, the teams lose focus, and the roadmap changes. At worst, retention becomes difficult and entire product plans have to be re-evaluated for what’s possible under new operating conditions. This kind of disruption hits at a particularly difficult time for Brocade customers. Many had bought into a proprietary layer-2 fabric built using ASICs designed by the SAN team (which is still a part of Broadcom). The next-generation platforms had already moved from layer-2 fabric to layer-3 fabric, leaving the upgrade path from their flagship VDX products in question. Tougher still, the next generation of products are new hardware platforms featuring new merchant silicon running a new operating system.
This transition could be particularly painful for customers. Stabilizing new platforms is difficult when changing only one major component. Changing three and then transferring ownership while right-sizing the business? “
This sort of attack has been out front a lot this year. When Avaya announced its Chapter 11 bankruptcy earlier this year Cisco, Mitel and others targeted Avaya’s customers.
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For example, Cisco wrote: “Let’s not dance around it. Avaya’s recent announcements have put a lot of people into the decision process. Change and uncertainty usually do. So then, what to do next? I’m not bold enough to say, ‘Hey, come on over and write me a check right now.’ That’s not how this works. It’s not an overnight decision. You have to figure out who you trust with your unified communications and customer care solutions. And to get there means asking a lot of questions – and getting the answers you need.”
In another post Cisco wrote : The typical pattern is that risk-averse companies diversify their platform choices early. Then, if one vendor begins to look risky, they quickly reconsolidate on a trusted vendor in a controlled manner. We might call these companies “early adopters” of risk mitigation. Other companies wait longer before migrating from at-risk platforms or vendors. Although this can make business sense, it can also greatly increase the difficulty and costs of the eventual migration. We saw this with Nortel in 2009, Aspect in 2016, and now with Avaya. Cisco says the kind of questions to ask during these times are:
- Will support for existing hardware continue?
- Will maintenance costs rise?
- What about innovation? Is there a roadmap?
- How can an unstable vendor transform how businesses care for their own customers?
Mitel wrote on its website: “If you’re an Avaya customer or were considering Avaya, Mitel is ready to help. With Mitel, your investment is future-ready, even as you grow or shift between on-premises communications, cloud communications or a hybrid of the two. Mitel’s expansive portfolio of customer experience, mobility and collaboration solutions provide a unified, comprehensive platform for your business communications – no matter what the future holds.”
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