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Thu 30 Nov 2006 08:00 PM

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Extreme focus

Arabian Computer News finds out how the new CEO of Extreme Networks is narrowing the company's focus, and what he believes it can bring to the Middle East market.

Arabian Computer News You joined Extreme a couple of months ago; how have the first two months been? Mark Canepa 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. Probably the most important one is to narrow the focus of the company; 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.

Luckily, the metro Ethernet market is a couple of billion dollars space, it's not one big uniform market. It's got several sub-segments, each of which has characteristics which make it a little bit different.

So you can choose not to have to play in all of them. The important part is you need to choose some segments that are large enough that you can be successful, and small enough that you can be number one or number two. That's the character of the company that we're changing.

ACN So which segments will Extreme be focusing on?

MC We haven't completely picked them - it's been 60 days! I've got the troops figuring 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. The focus and discipline which then can lead to better execution is the theme which I've brought to the company.

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.

ACN This shift towards 'narrow but deep' is in contrast to other vendors in the networking space that are trying to broaden their reach. Do you think your customers will want to deal with a variety of 'best-of-breed' suppliers, rather than an end-to-end suppliers?

MC Most companies of our size tend to be pretty well focused - if you look at the F5s, the Foundry's, the Force 10s, we pick some spots and go and do a really good job.

Second, customers like choice; Cisco's been losing market share over the past few years, not because they're necessarily doing anything wrong, but customers don't necessarily like the idea of just having one vendor.

And it's not just in networking - go and look at every segment of the computer business. Where there's a Microsoft, there's a Solaris and a Red Hat.

The important part is the way you give customers choice; the way we choose to give them choice is with standards, designing open systems, systems that are interoperable, and then creating ecosystems and partnerships that make you successful, such as our relationships with Ericsson, or Siemens, or Avaya - or in many cases smaller relationships with value-added resellers, which is why we bring the VARs together like we're doing this week. So absolutely, ecosystems are successful, customers like that idea - nobody likes to be locked in.

ACN How do you see emerging markets such as the Middle East within Extreme’s new plan?

MC 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 switch-based Ethernet networks. 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 that places like that really lend themselves to these advanced technologies.

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

MC Five to 10 years is a long time, but broadly the trend towards increasing communication is going to continue. If you can go from telephones to virtual reality technologies - which require massive amounts of bandwidth and tiny latencies - people will use them to get along.

Second, if you can get more telecommunication, you can reduce the amount of travel needed.

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 app-servers, 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 astute and try to watch it - but bandwidth will increase at least at the same exponential rate that it has been doing for the last five years.

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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