Extreme Networks Sharpens Its Focus on Solutions, Partners, Midmarket

Key to the strategic plan new CEO Ed Meyercord put in place a year ago has been to offer solutions to a defined market with the help of the channel.

Extreme execs

When Ed Meyercord took over as president and CEO of Extreme Networks last year, he inherited a company with its share of challenges.

The networking vendor two weeks earlier had once again missed its projected quarterly financial numbers; revenue had declined 16 percent year over year; Extreme lost $23.5 million; and it was seeing weakness in key markets such as higher education and venues. It also was feeling pressure from rivals Cisco Systems and Juniper Networks, and was struggling to complete the integration of Enterasys Networks, a wired and wireless networking company Extreme acquired the year before for $180 million.

However, the underpinnings of the company were solid, Meyercord (left in photo) said in a recent interview with eWEEK. Extreme had solid technology products, talented engineers, a good customer base in a midmarket and campus networking space that was being underserved by larger competitors, and—with the acquisition of Enterasys—a head start on most other vendors in the convergence of wired and wireless networks.

More than anything, what the company needed to do was improve its focus, a word that Meyercord and Norman Rice, (right in photo) executive vice president of Marketing and Corporate Development, kept coming back to during a recent interview outside of Boston. And focus was a foundation of the corporate strategy Meyercord put in place weeks after taking over the top position after coming over from Extreme's board of directors, where he spent several years.

Under his direction, Extreme Networks changed its focus to selling solutions rather than point products. The company focused on selling its wireless capabilities as well as its wired expertise, on the midmarket and campus networking spaces, on five key verticals and one bolstering and expanding its channel partners. The company focused on building a solid brand, developing an effective go-to-market strategy and better defining itself for its employees, partners and customers.

"I'm not sure Extreme knew where it fit" in the market a year ago, Meyercord said. "Today, we know exactly where we fit."

The refocused efforts also came with a restructuring process that included a remaking of the executive team—most recently, Steve Harrington rejoined the ranks as vice president of Marketing after almost two years away from the company—and a painful 18 percent workforce reduction of about 285 jobs, with the goal of saving $40 million in operational costs.

The efforts appear to be working. In the most recent financial quarter, revenue grew 4 percent from the same period last year and operating income hit $5.4 million, compared with the $5.6 million loss a year earlier. Gross margins are up, debt is down 20 percent and cash is up 20 percent, the CEO said. Anecdotally, enthusiasm is high in Extreme's offices, he said.

What's been important has been tightly defining the market Extreme focuses on and how the company sells into that market. The target customer has 200 to 1,000 employees and revenues of $150 million to $1 billion and data centers with 750 to 1,000 servers—although Extreme does have larger enterprise customers as well, Meyercord said. However, most customers are not big companies with large IT staffs, so what they need are solutions that come with the all the hardware and software they need to deploy and operate, rather than products they have to integrate themselves.

"Our customers don't have a big IT budgets, typically," Meyercord said. "The complexity factor for customers is more now than it's ever been."

Extreme, which now has about 1,450 employees, comes in with solutions that include not only the wired and wireless hardware, such as switches and wireless access points, but also software that includes its ExtremeXOS network operating system and tools for network management, application analytics, security and software-defined networking (SDN). Services also play a role. This solutions approach is a differentiator for Extreme, according to the CEO.

"We're very focused on solutions," Meyercord said, noting that rivals including Cisco, Hewlett Packard Enterprise (HPE) and Brocade still talk about the technologies. "Most of our competitors still compete on point products."