Extreme Networks has announced its intent to acquire Ipanema Technologies, the SD-WAN (software-defined wide area network) and SASE (secure-access service edge) division of Infovista. France-based Infovista, which had already had a major stake in the ground as a service assurance company, acquired Ipanema in 2015, well before SD-WAN went mainstream a couple of years ago.
Extreme will purchase Ipanema for 60 million Euros (approximately $73 million) in an all-cash transaction. The deal is expected to close in October, pending regulatory approval.
Since Infovista is privately held, revenue numbers for the Infovista division are not readily known. I know that pre-pandemic, Ipanema revenue was about €40 million annually but had fallen to €30 million and was probably sliding to the €20 million level. If that's the case, the €60 million purchase price is a steal and fits the mold of other Extreme acquisitions, because it is a top-tier technology that's effectively a stranded asset inside a larger organization where it doesn't fit.
Extreme makes another strategic acquisition to fuel its business
Extreme's addition of the Wi-Fi business at Motorola, Avaya's network business, and Brocade's Ethernet products, are other examples of how the company rolls. COO Norman Rice has a knack for finding these diamonds in the rough and has used acquisitions like these to fuel the resurgence of the company. The network vendor is now past $1 billion in revenue and has become a Gartner Magic Quadrant Leader, which is impressive given the company's bumpy past. The purchase of Ipanema is yet another example of how the company will use a modest investment to fuel another wave of growth.
Ipanema isn't the most well-known SD-WAN company, but its technology is very good. However, Infovista was not willing to make investments in the areas of sales and marketing. The company was founded in 1999 as a WAN optimization vendor, which competed with the likes of Riverbed and Packeteer. I had many engagements with Ipanema customers, and they raved about how good the tech was. Evidence of this? The company was a perennial Gartner MQ Leader for years, and this solid foundation is what it used to build its SD-WAN portfolio.
More recently, the company partnered with Equinix and CheckPoint to develop a full cloud-native SD-WAN and SASE platform. This new product shifts SD-WAN to an on-demand service that can be scaled up and down like other cloud services.
Ipanema has solid SD-WAN and SASE technology
With this big product investment, one might wonder why sell Ipanema? The answer is focus. In a media advisory, Infovista stated: "The planned transaction is part of Infovista's strategic transformation as it sharpens its focus on delivering its cloud-native lifecycle automation platform." SD-WAN and SASE do not fit into that strategy. From my dealings with Infovista, this is the right move, because they should focus on service providers. The company doesn't understand how to sell to businesses or the importance of investing in sales and marketing. Despite having a strong product, they were getting drowned in an ocean of other companies that were far better in those areas. Thus Infovista fell behind.
I expect Extreme to do big things with the Ipanema product. The investments that Infovista made in developing the cloud-native platform align nicely with Extreme's cloud-first approach. In the short term, it's strong enough for Extreme to sell as a standalone product, but the company does expect to have the technology integrated into its ExtremeCloud platform within a year. This also will enable Extreme to bring its AI capabilities to SD-WAN and SASE, which should add significant value to Ipanema customers. This also boosts Extreme's total addressable market, because the combined SASE-plus-SD-WAN market could be as big as $20 billion in five years.
Ipanema is well aligned with Extreme's Infinite Enterprise Vision
The acquisition is also well aligned with Extreme's strategy of the Infinite Enterprise, where connectivity needs to reach anywhere a worker is located. Before Ipanema, Extreme didn't have the products to reach branch offices and home workers at scale. While there were other SD-WAN and/or SASE vendors Extreme could have purchased, I believe it was the strong cloud back end that made Ipanema so attractive. Its cloud-native software delivery platform now makes this possible and gives Extreme products that span WAN, LAN, data center, and campus -- all of which can be managed via the cloud.
Extreme will use Ipanema to establish a second technology innovation center in Europe. This will strengthen Extreme's European footprint and bring into the company several service providers and managed service partners--including a couple of behemoths such as British Telecom and Orange, the enterprise division of France Telecom.