Enterasys – a US networking company that makes routers, switches, Wi-Fi gateways, security and management software – is aiming to take on networking goliath Cisco with the help of Extreme Networks.
Enterasys provides connectivity to places that have a large number of devices using the same network, such as sports stadiums, universities and hospitals.
The Extreme Networks acquisition, announced September 12, will help Enterasys to bulk up and compete more directly with larger networking companies, according to the company’s CEO, Chris Crowell, who believes that the firm is currently the sixth or seventh largest enterprise network vendor in the world.
"This truly is a merger as opposed to an acquisition. It’s to try to get the best of the best and really build the number three or number four competitor in the marketplace to compete with the number one, which is Cisco,” he said at the company’s headquarters in Salem, New Hampshire, this week.
"We compete against Cisco every day as a smaller player at the moment but in the future, as a number four player, it would be much more to our advantage."
The Enterasys leader claimed that business is booming at the moment as a result of the Internet of Things phenomeon, which involves an increasing number of internet-compatible devices connecting to networks with limited bandwidths.
The firm's key customers include Toyota, the US Department of Defense, and the University of Southern California, in addition to two American football teams, the New England Patriots and the Philadelphia Eagles, who have both deployed Enterasys OneFabric Wi-Fi in their stadiums, which can each accommodate nearly 70,000 people.
However, Crowell said that the size of a networking company is important in order to secure certain customers and claimed that was one of the main reasons for going ahead with the acquisition.
"It’s important to have a critical mass in this market," he said. "There’s a barrier to entry and you have to get to a certain point or you can’t even get into it. As we come together [with Extreme Networks] we’ll get leverage in R&D, marketing and sales, logistics and the supply chain."
Under the $180 million (£112 million) deal, which should close mid-November, the New Hampshire-headquartered firm’s 900 employees will work alongside Extreme Networks’ 1,000 plus workforce.
The two companies plan to combine their product and technology roadmaps and ultimately integrate the Extreme Network's ExtremeXOS network operating system with Enterasys' products over the next two years.
Enterasys chief customer officer Vala Afshar said the deal would enable Enterasys to "double customers, revenue, and talent pool."
More than half of Enterasys’ business comes from the US but Crowell said the European market, which currently accounts for 35 percent of the the company's revenue, is growing as the company brings on more customers in the region. Crowell was less interested in the Chinese market, saying, "We do very little business in China and we’re not looking to build our business there."