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The US Justice Department is suing to block the proposed $14 billion deal that would unite Juniper Networks and HPE. Telco market concerns aren't a headline here: the DoJ calls out the deal's potential to create fewer choices for enterprises in the growing market for advanced WLAN products and services.
"Kill Mist!!!!!!"
According to a complaint filed this week by the US Department of Justice, that was the 2021 battle cry of a former HPE senior VP of sales in the Americas.
The DoJ is suing to block HPE from getting its mitts on Mist's technology. Mist was bought by Juniper in 2019. The DoJ's argument against HPE buying Juniper in a $14 billion acquisition announced a year ago is that the deal would reduce choice in WLAN enterprise networking to two big vendors – HPE and Cisco.
The DoJ's complaint labeled the former sales VP referenced above as someone who "encouraged his teams to combat Juniper's marketing and sales, saying that he was 'personally involved in 5 Head to Head street fights with Mist' and '[t]here are no rules in street fights.'" The complaint alleges HPE failed to stop Mist in the marketplace, so it instead opted to buy Juniper.
A year ago, HPE boss Antonio Neri went to MWC Barcelona to pitch the deal to telcos, saying that having Juniper would make HPE more relevant in the telco space and a more capable alternative to industry goliath Cisco.
HPE, which owns WLAN networking competitor Aruba, said adding Mist to its ranks would make sense. Last year Neri framed the deal as combining Aruba's hardware muscle and Mist's AI smarts. But the DOJ's complaint leaned on an assertion that Juniper's Mist system – with its ability to automate management, configuration and other chores in complex enterprise networks – has outrun HPE's tech capabilities and frequently forces HPE to discount its gear to compete for contracts.
When referencing an HPE "Beat Mist" campaign from two to three years ago, the DOJ found that HPE wasn't worried about Cisco. "HPE's internal documents do not show the same urgency to out-innovate Cisco on network management software, and many enterprise customers do not consider Cisco an innovation leader in AIOps and other advanced software tools," the DOJ complaint said.
Justice fears 'fewer credible choices'
At this point in the complaint, the DoJ chucks everyone under the bus except Juniper: "Many large customers… describe Cisco, HPE, and Juniper as the three leading vendors for their customer segments and believe Cisco's products compare unfavorably to HPE's and Juniper's on price, features, and reliability. Those customers benefit from having Juniper as a credible alternative to Cisco and HPE in the market. If HPE successfully acquired Juniper, the acquisition would leave them with fewer credible choices."
Juniper's reaction to the DoJ is a broad rebuttal of every point about the WLAN market and its competitors. The company concludes that fewer, larger vendors will lead to more choice and more innovation, without citing exactly how that would happen. But, again, there wasn't a coherent case for what value HPE and Juniper combined would bring to telcos.
The DoJ's pushback to an HPE-Juniper combination will raise some eyebrows in the service provider landscape and on Wall Street, where the merger was seen as a catalyst for HPE's stock. But while Juniper and HPE were evangelizing the combination at MWC last year, the telecom benefits of the merger took a back seat to the talk of enterprise WLAN activity.
"Based on results for the most recent fiscal years, Juniper's service provider business would account for just 18% of revenues at HPE's new-look networks division," Light Reading reported a year ago.
For now, HPE and Juniper will focus on the legal battle against the Justice Department, as the Trump administration's leadership roles are still in various stages of confirmation. HPE couldn't kill Mist several years ago and it may not be able to own it, either, if Trump's antitrust team prevails and prevents more networking market consolidation.
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