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Fri 1 Dec 2006 12:00 AM

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Extreme close-up

Extreme Networks’ new CEO, Mark Canepa, headed to Dublin last month to meet his senior EMEA team and address the vendor’s partners in the region. NME caught up with him in Ireland, to talk about his plans for the company.

NME: You joined Extreme a couple of months ago; how have the first two months been?


It’s been great, I’ve really enjoyed digging into the company and figuring out strategically and operationally where we are. Even in the first 60 days I’ve begun to turn some knobs and change the character of the company in a couple of ways. If you look at the company from a 50,000 foot level, you see metro service providers and enterprise data centres as our markets – those are the right markets for this company, we’re not going to change the character of the company at that level. But when you go from 50,000 feet down to 1,000 feet, you’ll see we’re changing a lot of things.

Probably the most important one is to narrow the focus of the company; if the metro space is a room, we’ve previously been trying to focus on the whole room, and only gaining a few percent of market share. So what we’re working on is to say, we’re only working on the table and the chair, within the metro Ethernet room – trying to do more in a smaller segment. Given the size of company we are, the only way to win in a particular segment is to be number one or number two – if you’re sixth, seventh or eighth, you won’t get anywhere.

NME: So which segments will Extreme be focusing on?


We haven’t completely picked them – it’s been 60 days! I’ve got the troops fi guring all of that out right now. But in general, it’s going to be those segments that have more coupling to what we do really well, which is build significant amounts of knowledge of the network right into our switches – where the more complex network problems are, they’re likely to be the segments that yield the most to how we do engineering.

We’re also going to pick some verticals, places where we’ve been successful in the past: higher education, hospitals, healthcare; gaming, entertainment – those kinds of verticals. That’s the whole idea of changing the character of the company. It’s a US$400 million company – we don’t need to take on the entirety of the $55 billion Ethernet market: we need to pick some battles.

An area of focus which we’ve geared up is wireless and security: just a couple of weeks ago, I created a separate division in the company. So now we have two divisions, one focused on switches, and one focused on wireless and security. There are two general managers – they have to interoperate, but they get to write their own business plans and figure out where to attack the market. But the whole idea of not having one big gigantic engineering organisation which is responsible for everything, not having one marketing organisation, those are the structural changes that I’m making in the company.

Some people wake up one morning with much more specific missions to go after; that way they know what to do, they’re accountable, they’re going to get measured on the success or otherwise of the mission. And I think it’s that focus, discipline and execution that are going to get the company moving in the right direction now.

NME: Looking at your vendor relationships, how do you see these evolving, and what are they delivering for Extreme?


They’re delivering – we’re doing voice over IP installations every day, by the dozens. For example, we have a strong linkage with Avaya in the Avaya reseller community, so we’re out there every day: those partners are out there speccing Extreme switches in VoIP networks.

So the partnership is already working – in excess of 10% of our revenue over the last couple of quarters is due to the Avaya relationship. Implementations with Siemens – there was a recent well-publicised win in Europe with Telefonica, where Siemens specced a bunch of our stuff , and Telefonica bought it. With Ericsson, if you go around a number of Ericsson implementations around the world and lift the covers, you’ll find Extreme switches. These partnerships are delivering revenue every day.

NME: How do you see emerging markets such as the Middle East within the new plan for Extreme?


It’s a more complicated question than you might think! In the emerging markets, we see a strong metro play, even more so than in the established markets. Established markets tend to have large well-developed telecommunications companies which to a large extent have spent a tonne of money over the past 30 to 40 years building up an infrastructure – which may be obsolete by today’s standards. But it’s tough to get them to change, they have protocols in there, and it takes a long time to roll over a metro infrastructure. So you tend to focus on organisations which are smaller, newer and which act more quickly – these tend to be biased towards the emerging markets. If you look at our EMEA strategy, we’re focusing a lot of our new penetration in new countries with new metro service providers, and this seems to work very well.

The Middle East is no different – metro is an entry point, as service providers tend not to have built up the old Layer 3 or MPLS or voice networks. They’re going directly to Layer 2 switchbased Ethernet networks. Every country is a little bit different, and you need the proper entry strategy, which is not just us sending a couple of sales people in there. You’ve got to get the partner community, the service and support infrastructure – there’s a whole pile of stuff associated with entering a new territory. That is up to the local sales management, and it’s a big focus of discussion as to exactly what the best tactics are. Everyone is unique, but clearly places like the Middle East are growing very rapidly, large segments of the population have very nice standards of living, they want a set of services, they want the triple-play option, and voice over IP and all that kind of stuff . So places in the Middle East, such as the UAE, are very much first world countries, so we believe places like that really lend themselves to some of these advanced technologies.

NME: Looking at the technology side, where do you see networking in five to 10 years time?


Five to 10 years is a long time, but broadly the trend towards increasing communication is going to continue. We’ve been on this trend ever since Alexander Graham Bell invented this darn thing called the telephone.

It’s been 120 years, and it just keeps going. Communication has the potential to solve many of the major problems facing the planet – these are either cultural differences that are causing major issues, or energy problems: both of these can be partially solved by better communications. The more bandwidth you have, the more cultural exchanges are possible, and the more people can understand one another. If you can go from telephones to virtual reality – which requires massive amounts of bandwidth and tiny latencies – people will use it to get along.

Second, if you can get more telecommunication, you can reduce the amount of travel needed. You may not be able to get rid of travel, but even if you can cut it in half, if people could work from home a couple of days a week and be just as productive as at the office, can you imagine the amount of savings? If you think about emerging countries such as China and India, the amount of energy needed to get those countries up to the level of the developed world may not be doable. So there could be other ways in which you can look at some of these problems.

So I think the next five to 10 years are going to be huge for the network. Applications are becoming more distributed – the whole Web 2.0 thing, SOA, are forcing this distribution. We’re just getting started with appservers, we’re just getting started with Java – the more distributed the applications, the more you need high-power networks with low latency and bandwidth controls, to get all the stuff to work together. I think the fun’s just getting going – it’s going to be hard to tell exactly how all the little pieces of technology are going to evolve over the next few years, we have to be quick and try to watch where they are going all the time. It’s a good industry to be in, it’s a good place to be in – the trick is to be astute and nimble.

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