Extreme Networks Buys Brocade's Data Center Networking Business from Broadcom
Broadcom, one of the largest semiconductor companies in the world has planned to sell its Brocade Communications Systems' data center switching, routing, and analytics business to Extreme Networks in a new deal worth $55 million. The deal is expected to be a major boost to the data center networking business of Extreme Networks. According to local reports, shares of San Jose, Calif.-based Extreme touched the market cap of $703 million, hours after the report. With Brocade data centre portfolio, Extreme Networks’ could well be in a position to expand its technology growth across all sectors. Extreme Networks has set out to make the transaction in cash, with $35 million at closing and $20 million in deferred payments, as well as the potential for performance-based payments to Broadcom, to be paid over a five-year term.
Last year, Broadcom acquired fellow semiconductor company Brocade for $5.5 billion. But, the company has not been able to finalize the deal due to objections from the Federal Trade Commission. Currently, the deal has been put under an extended antitrust investigation by FTC. Broadcom said that it still expects the merger to close in the second half of fiscal 2017, which ends Oct. 28. Broadcom has said it expects the transaction to close before July 30, 2017, the end of its third fiscal quarter.
Ed Meyercord, President and CEO of Extreme Networks, said: “The addition of Brocade’s data centre networking business significantly strengthens our position in the expanding high-end data centre market and reinforces our strategy of delivering software-driven networking solutions focused on enterprise customers.
“This announcement, coupled with our recent announcements regarding our position as the stalking horse bidder of Avaya’s networking business and the successful completion of the integration of Zebra’s wireless LAN business, along with Extreme’s organic investments in R&D, will result in a state-of-the-art, newly-refreshed portfolio of enterprise solutions for our customers.”
Lloyd Carney, CEO of Brocade, said: “Our two companies [Brocade and Extreme] have similar strategic visions and believe that innovation will increasingly be driven through software capabilities that allow customers to successfully transform their networks for digital business.
“In addition, we believe Extreme’s desire to build on the innovation and momentum of our completely refreshed data centre portfolio, including the new SLX family, as well as its intention to drive the ongoing success of our VDX and MLX families, will allow our customers and partners to continue to leverage the full benefits of our world-class portfolio.”
The Texas Data Centre Market
The overgrowing popularity of Texas as a preferred data centre market is good news for organizations looking to diversify their data centre expertise. Historically, Texas has always attracted a variety of data centre companies owing to its rich entrepreneurial culture, skilled workforce and business-friendly policies. Also home to 54 Fortune 500 companies, the region continues to supply large land sites for data centers. There is much debate on the future of data centers with the rise of cloud technologies. The growth of hyper-scale cloud operations is expected to play a key role in improving data centre projects. Cisco believes that data centre to data centre traffic will account for almost a tenth of data traffic and internal data centre traffic will account for more than three quarters (77 per cent) of all data centre traffic.
Dallas is considered to have the nation’s lowest power costs, and an economic climate that is favorable for business growth. Dallas is one of the fastest growing markets in the country. Data center companies in Dallas have taken up an innovative approach to build data centre facilities in a timely and cost-effective manner. Over the last several years, corporations like Toyota, State Farm, Pizza Hut, and J.P. Morgan Chase established large office locations in surrounding suburbs north of Dallas.
Bob Landstrom, director of product management at Interxion, explains: “Businesses should look at what’s consuming the data, and where that consumption happens. There are two choices; you can either have a data centre in the suburbs and that connects into multiple edge data centres that collect and distribute the data and connect into the core suburban data centre. Or you have your core data centre close to, the population and the data devices.”
“To serve a congested area like London, it’s much better for your core data centre to be in the same location that you have the edge data centre. It makes your network connectivity simpler, and simplifies the data traffic flows for your applications,” he said.
Most businesses have a bias towards building data centers around Texas because of its robust infrastructures, reasonable power cost, and low-risk of natural disasters. Industry bigwigs like Microsoft already have their own data centers in this area. When offering innovative Cloud solutions, businesses first need to access how they can choose the right location for their data centre.