Change is often good, but it can also make people nervous and uncertain about the future. Andre Kindness, principal analyst at Forrester Research, claims that the pending Hewlett Packard Enterprise’s (HPE’s) pending acquisition of Juniper Networks - plans for which were originally announced on 9th January 2024 – is causing concern across the networking ecosystem. He adds that Cisco’s corporate restructuring, which aims to take away any focus on its legacy operations, is adding to customer trepidation - leading some enterprises to put their investments on hold.
Speaking about the HPE-Juniper deal, which is expected to conclude in the early part of 2025 according to a press statement from HPE, he said that there are concerns from both HPE and Juniper customers. He explains: “Typically, if customers are strong enough to look outside of Cisco and they’re not a Cisco shop, then HPE, Aruba, Juniper are the primary ones that they’re looking at. I’ve had customers put some of that on hold at this point.”
Juniper acquisition: ‘Complementary’
This hold hasn’t dampened HPE’s confidence. Antonio Neri, President & CEO of HPE comments in a Q4 statement, ‘HPE delivers exceptional Q4, capping off a strong fiscal year that delivered industry-leading innovation’, “We believe our pending acquisition of Juniper Networks, which will be very complementary to our successful HPE Aruba Networking business, will enable us to provide a complete portfolio of modern, secure networking solutions that offer essential foundations for AI. The combined company’s enhanced ability to compete and innovate will fundamentally improve the networking industry and position HPE as a leader in the market.”
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“We are at the forefront of a new era, driven by AI, hybrid cloud, and the next-generation networks that connect and empower us all. HPE’s task is clear: to take action, embrace change, and lead during this era of extraordinary growth and opportunity. I am proud that our team members around the globe bring our HPE innovations to customers every day so that we can help them modernise their IT infrastructure and transform their organisations for the better.”
In a separate statement, an HPE spokesperson says that both HPE and Juniper look forward to “being able to provide a complete portfolio of modern, secure networking solutions that offer essential foundations for hybrid cloud and AI to our customers.” They hope that joining forces will create an enhanced ability to compete, innovate and fundamentally improve the networking industry, while also strengthening U.S. national security interests. Ultimately, HPE wants to position itself, says the spokesperson, as a strong U.S. innovator.
Putting customers first
As part of the deal, Rami Rahim – the CEO of Juniper Networks will lead the unified HPE and Juniper networking business of Hewlett Packard Enterprise after then $14bn acquisition has been completed. He will report to Neri. In a statement posted 10 months ago on social media network LinkedIn, Rahim says Juniper Networks’ guiding principle is to always act in the best interest of its customers. He claims that HPE’s acquisition of his company won’t change that:
“Together, both Antonio Neri and I believe this is the right move to take full advantage of the immense AI opportunity before us. I want to be clear that our goal in embarking on this acquisition is not to eliminate products, but to offer enhanced choice and more innovation for all our service providers, cloud providers and enterprise customers.”
Deal to boost HPE credibility
Shamus McGillicuddy, Vice-President of Research for Enterprise Management Associates' network management practice says HPE’s acquisition of Juniper comes at a time when HPE wanted to boost its credibility in applying artificial intelligence (AI) to network management. After all, Juniper was also growing its enterprise business, which was driven by the successful implementation of AI-based solutions and because of the acquisition of Mist.
He explains: “HPE had AI capabilities through its Aruba division, but Juniper was showing more value than anyone else in the market. Also, Juniper has a lot of strength in the telecoms market – particularly with routers, and HPE was targeting that market with its data centre solutions – attempting to sell into the mobile packet core. Juniper helps HPE to build out their portfolio for service providers.”
Regarding the suggestion that customers have concerns about the deal, he says this is because Juniper and the Aruba division of HPE both sell switches for campus and data centres. They also both sell SD-WANs, and so he thinks that customers from both companies will inevitably be asking which product has a future. This underlies the potential for uncertainty. He adds that here is a conventional wisdom that HPE isn’t good at innovation when they acquire a company. “Juniper customers worry about that – at least that’s the perception, but it might not be true, and there is an element of uncertainty amongst at least some Juniper customers,” he claims.
McGillicuddy also observes that whenever a large company buys another large company, there a question arises about whether the people who develop the products and work in customers services as well as product development, product engineering and sales engineering will stay or go. He stresses that customers don’t want those people to go.
Despite this, he comments that with the Juniper acquisition, HPE is potentially positioning itself to further erode Cisco’s market share, and remarks: “I don’t think there is uncertainty in the market, but it’s a competitive market with sales and marketing opportunities.”
Will Cisco’s restructuring help market and customer confidence, and improve Cisco’s fortunes? In his view that’s not clear, suggesting that to be competitive Cisco needs to demonstrate more agility and show that it can innovate faster. “They have done at least 3 lay-offs and restructuring over the last 3 years, and so it’s not clear that this is the answer,” he says.
Keeping up with competitors
Stephen Thomas, Senior Industry Director - Enterprise Network Services at Frost and Sullivan, says he sees the HPE-Juniper acquisition deal as being an HPE play to keep up with Cisco, Broadcom and Huawei, as he finds that most industries tend to like the big 3 players. He therefore comments: Huawei is dominant in Asia, and this is forcing HPE, Cisco and Broadcom to expand. Cisco has already started, and Huawei is already there. They have 5G handsets to ethernet switches and telecoms equipment.”
He believes the only concern is that deal may not be good for Juniper as the acquired firms. “In this case that’s Juniper and Mist as both Juniper and Mist have solid reputations in their perspective markets and now will be part of the HPE family, but I don’t see much overlap.” He thinks there is enough competition in the marketplace to drive innovation, and so despite the expressed concern, he doesn’t see the merger stifling innovation.
While some product integration or rationalisation may occur as a result of HPE’s acquisition of Juniper, Thomas also suggests that Neri’s statement about there not being much overlap between HPE and Juniper’s products, is valid. However, he elaborates: “He’s filling gaps, but to satisfy customer concerns; he could say I am not going to do Broadcom and VMWare did with regard to pricing; bundling, or partner strategies. He should say he’s going to learn from the mistakes from Broadcom. It’s not only about keeping it simple; it’s about doing the integrations in a faster manner. That should be some of the points he makes to clients and the market as a whole.”
As for whether there is no overlap at all – and perhaps contradictorily - he considers such a statement to be “a bit of a stretch”, while also stressing that Juniper is a nice addition to the HPE portfolio. However, he admits there is some overlap between the “Aruba Edge and Mist capabilities, so they will want to get those incorporated correctly.”
‘Wait and see’ approach
He concludes by saying that in the short-term for HPE and Juniper, the deal will lead to customers – and perhaps even their partners – taking a ‘wait and see’ approach. In the meantime, it’s business as usual because the merger and the creation of synergies between the two companies. may take at least a year to complete. Yet, while some customers may in the near term look elsewhere, he thinks that if HPE gets it right amidst the ‘chaos’, the overall portfolio could put HPE on a much better footing to compete with the likes of Cisco, Broadcom, and Huawei.
