Extreme Networks has been very busy announcing acquisitions lately.  Yesterday, it announced plans to acquire Brocade's Data Center switch business and on March 7, it announced plans to acquire Avaya's switch business.  Additionally, it completed its acquisition of the Zebra Wireless LAN business just last October 2016.
When the two switch acquisitions are completed - some time in the summer of 2017 - the company will be vaulted higher to become one of the major share leaders in switching.  To put the acquisitions into context, assuming the acquisitions had been completed last quarter, using our 4Q16 Ethernet Switch Market Report revenue share figures, the company's share would have been:

• #6 Overall Ethernet Switch vendor worldwide
• #3 Campus Switch vendor in North America
• #5 Data Center Switch vendor in North America

Acquisitions and consolidation in the networking industry have been occurring at a rapid pace over the past few years.  HPE acquired #2 WLAN vendor, Aruba; Arris is acquiring Ruckus plus Brocade's ICX product line, for instance.  It is our view that scale is becoming more important in the networking market as many customers are looking for vendors that support both wireless and wireline  campus technologies.  Additionally, scale matters in the Data Center switch market as well, as Cloud service providers are experiencing a very rapid capital expansion of their services networks.
In 2016 Data Center switch market share leaders by revenue were (alphabetically) Arista, Cisco, Juniper and White Box vendors.  In the North America in the Campus Switch market by revenue, considering Extreme had acquired the switch divisions of Brocade and Avaya it announced in March 2017, market share leaders were Cisco, Extreme and HPE.
Starting this year, we expect that networking customers will get used to seeing Extreme in the top share lists when considering vendors.

It was great to run into old friends at OFC today.  As I walked the floor, had meetings, and ran into people it became clear that this years OFC was once again about the data center and Cloud and how vendors are positioning themselves for that market and for 400 Gbps.

We saw Juniper’s new line card on the QFX10K on the show floor as well as a massive 400Gbps demo at the Ethernet Alliance booth as evidence that the Cloud is moving more towards Ethernet in the transport networks and wants converged platforms that do it.

There is still one open question though, one that I hope we get more color on tomorrow at the OIF session on 100G serial that I’ll be kicking off.  The question is, what will the form factor be for 400 Gbps.  Will it be DDQSFP or OSFP.  We saw most optics vendors showing both in their booths today.  While we believe there is still time for the market to make a decision, we hope that the Cloud providers will ultimately make a decision that is best for the rest of the industry, one that allows vendors in this space to thrive for the long term.  We didn’t get this feeling though when the Cloud providers talked in their session.  Vendors, especially at the component level need to get significant volumes in order to get returns on their investment dollars.  We continue to remain concerned that all the different form factors and variations in speed and distance will make it difficult unless the interim steps to 400 Gbps are stepping stones.

​It was great to catch up with old friends and make new friends at OCP this year.  The show was highly successful with attendance at the Facebook and Microsoft booths so large that it was difficult to move around.  On the switch side, most of the announcements were incremental to the market, but with new chips on the horizon, and a delay in 100 Gbps because of supply constraints, we see this as a temporary pause ahead of what will likely be some bigger announcements in 2018.

There were many highlights at OCP, but three things caught our eye while walking the show floor on both days.

•    Microsoft’s project Olympus server is about to transition Microsoft away from High-Density servers and towards Rack servers.  This is more in line with what other Tier 1 cloud providers are doing.  We note the smart-NIC is still a multichip solution, one that could be further reduced in future generations.  They also announced ARM based servers and joined Facebook on announcements in machine learning and AI optimized compute.  We see this change in Cloud architectures as a good sign for the industry.  The market is quickly moving into more use cases, which will help drive growth beyond just moving workloads away from the premise market. 

•    The white box vendors were in force at the show.  Edgecore showed various Fixed and Modular form factors.  We note that some of these boxes are modified for larger Cloud customers with the inclusion of large SSDs or memory.  We have a pretty good sense of what is using these additions, but that is a topic for a more detailed report.  We also saw Quanta and Delta with large presences on the show floor.

•    This year we saw many software announcements around OCP.  Arista announced their containerized EOS operating system (cEOS).  We saw Apstra and Cumulus active at the show as well running into many other software vendors in attendance.  OCP has done a good job at straddling the hardware/software boundary, but clearly the software needed to run these networks is quickly evolving as well.