Extreme Networks CEO Looks To Better Company With Tighter Focus By Chad Berndtson, CRN

What’s ailed Extreme Networks in recent years isn’t that easy to put a finger on. Its financial position has stabilized, its networking and infrastructure technologies are acclaimed, and while its channel partners have been plenty frustrated, they’re not abandoning ship.

There’s just something missing. And VARs who have been around the vendor for any good length of time see some combination of marketing air cover, market penetration and true channel outreach as what’s been lacking.

“I consider them to be a challenge,” said Gary Berzack, CTO and COO of eTribeca, a New York-based solution provider. Extreme’s products can match the feature sets and quality provided by the Ciscos and Junipers of the world, he said, and they’re also good complements to Avaya — with whom Extreme is tightly partnered — and Wi-Fi solutions from the likes of Meru Networks, Ruckus Wireless and other providers.

But to Berzack, “it continues to be a challenge that the market just isn’t asking for it. Extreme is a product that really needs to be requested.”

So why hasn’t Extreme been able to raise its profile?

“I’m perplexed by it,” Berzack said. “They’re fair, they’re good people, and there are good margin opportunities.”

Despite their dedication to Extreme’s products, many solution providers don’t see Extreme as the marketing powerhouse that will help it post true channel growth and true revenue growth in its target markets.

“They have great stuff and their R&D has never really been an issue,” said one Extreme partner, who requested his name not be used. “But they just can’t make the brand awareness piece line up for them. We have to spend so much time doing that for them, and that’s really not what you want from your vendor. It’s fine, and encouraged, to see resellers as extensions of your sales force, but we need to be backed up.”

The perception of Extreme as great with technology and lacking with outreach is something VARs agree on. And it’s a perception Extreme’s new leader, Oscar Rodriguez, is looking to change.

Rodriguez, who became Extreme’s president and CEO in August 2010, said he has a clear direction and strategy for the company going forward, and it starts with putting Extreme’s best foot forward.

“We are better off adding value to the industry by focusing on the places we’re good at,” said Rodriguez in a recent CRN interview. “We’ve created a new strategy along those lines, and it’s time for us to talk about it. Instead of, ‘Let’s try to meet the needs of all the different customers,’ given the size of Extreme, let’s pick and choose and places we can add real value and where customers have a real need and where there are partners we can enable. So, we’re going to pay clear attention to a specific set of demographics.”

By the time Rodriguez was named to lead Extreme, Bob L. Corey, Extreme’s former chief financial officer, had been acting president and CEO for nearly a year, following the exit of former CEO Mark Canepa and the elimination of 9 percent of Extreme’s workforce during a fall 2009 restructuring. Extreme’s financial position had weakened during that period, and many Extreme VARs felt the company’s management and channel structure had fallen off course.

Rodriguez brings to Extreme a healthy networking and service provider background, as well as deep channel experience. He came to Extreme following a three-year stint as CEO of Movius Interactive, which focuses on messaging, collaboration and mobile media for service providers. Before that, he was chief marketing officer of Alcatel (NYSE:ALU)-Lucent’s enterprise business group, president and CEO of Riverstone Networks (later sold to Lucent), and president of Nortel’s enterprise solutions and intelligent internet divisions.M

He joins the company in a solidifying period, one where, to hear Rodriguez tell it on Extreme’s second quarter earnings call in late January, revenues are on the rise and he expects percentages to grow throughout the rest of the year.

At the time of the call, Extreme said it had eliminated 5 percent of its workforce — about 35 employees — as part of a plan to lower operating expenses by as much as $2 million per quarter and $8 million annually.

But growing revenue and profits also means focusing Extreme on vertical markets and technology areas where it is strong, and in discussion with CRN, Rodriguez highlighted education, cloud services, and service provider opportunities.

“A four-year college campus is a leading indicator of some of the things happening in enterprises in general,” Rodriguez said of education. “Much of that is because of the fact that you have such a high turnover of staff and personnel accessing the network, a plethora of disparate devices and an area where great price performance is expected. That IT department at a 4-year college campus is going to be very busy, and you want to tailor the behavior of the network to the users’ needs."

The telecom and managed services arenas, including cloud infrastructure and cloud services, are other areas rich with opportunity for Extreme, Rodriguez said. Providing the networking backbone for cloud and other services to be offered flexibly and conveniently — and at reduced operational cost — is an area where Extreme excels, and Rodriguez is looking to add data center cloud customers throughout the world as part of Extreme’s push in those areas.

“Extreme is focused on being very efficient by relying on a single operating system, and we’re very efficient in the way we deploy systems,” he said. “Carriers needs something efficient and high performance. I think we’re well-versed in where a lot of this needs to go.”

Extreme does 95 percent of its business through channel partners, Rodriguez noted, and his goal for channel partners is strong products with a better marketing backstop.

“Arm them with data products focused in specific areas to let them win, and the marketing goes with that. I’m not trying to do very horizontal marketing like we’ve done in the past, but put wood behind the arrow and make ourselves prominent,” he said. “We need to give them the air cover and the lift they need. What’s been missing is ‘What is the product strategy and how does it solve the problem of a particular customer set?’”

Berzack said Extreme had been better about reaching out to eTribeca this year than in previous years, but to him, Extreme has its work cut out for it where market awareness is concerned. Extreme can’t be the company that just offers “the right price to win the job” when VARs bring them opportunities, he argued.

“If I was sitting there as their chief strategist, I would be doing significant demand generation from the end-user community. Engage with marketing strategies, do severe, multi-faceted campaigns and pound away at these different markets,” Berzack said. “[Extreme] is a nice-to-have. They fill a niche. They’re not reaching out as aggressively as they could or should. They’re under-resourced.”

Tom McDougall, who heads Extreme’s partner council, said that Extreme’s top VARs have had several conversations with Rodriguez and that he’s been receptive to concerns and clear and consistent in telling them his vision.

“Take education. We’re kicking [butt] and taking names in some of the education markets,” said McDougall, who is president and CEO of High Point Networks, a West Fargo, N.D.-based solution provider. “We heard from Extreme, ‘We have a targeted approach and here is our go-to-market, and here is our strategy.’ That’s not something that’s existed within Extreme before.”

The brand recognition hurdle could definitely be easier to clear, McDougall admitted.

“I think it’s very important we have an aligned mission, and that their channel resources are in lock-step with us,” he said. “I feel as though we do have that most of the time, and I’m not a marketing expert. But from a marketing standpoint, could there be some kind of campaign, and after we could go into a customer and they say, ‘You know, we’ve heard of you?’ ‘We’re maybe not sure where, but we have heard of you?’ Something to make enough of a pique of interest.”

It’s for those messages from partners that Rodriguez has one of his own: I hear you.

“Partners are not going to try to convince a customer on your behalf that you’re the solution they should buy,” Rodriguez said. “We, the manufacturer, have the responsibility to do the awareness generation.”

Along with Extreme’s technology and channel priorities, going forward, Rodriguez said he will look to strengthen Extreme’s inbound and outbound OEM relationships for the market reach they can provide.

He’s also continuing to make internal changes, including to bolster Extreme’s executive team. Recent recruits include David Ginsburg, who was named to the newly created role of senior vice president of strategic marketing late last year. There’s also Jim Judson, who this month was named Interim Chief Financial Officer as Extreme continues its search for a permanent CFO following Corey’s early March departure from the company. And Edward Meyercord on March 9 was named independent board chairman, succeeding fomer chairman and Extreme co-founder Gordon Stitt. Stitt will remain on the board.

Above all, rest assured, Rodriguez said, that the channel and Extreme’s market presence have his full attention.

“Extreme always believed in being on the leading edge and investing in R&D,” he said. “We know we have to serve the marketing better and put the training in place, and we will be putting investments along those lines.”