Feature Story: Juniper's Enterprise Vision

The Ethernet switches are out, but analysts wonder if Juniper's puzzle is still missing pieces

Craig Matsumoto, Editor-in-Chief, Light Reading

February 7, 2008

11 Min Read
Feature Story: Juniper's Enterprise Vision

NEW YORK -- Yes, it's corny. Juniper Networks Inc. (NYSE: JNPR) founder Pradeep Sindhu pulls the black cloth on cue, revealing what everyone already knows is underneath: The prized EX line of Ethernet switches, making their debut. Spotlights shine, camera shutters click, and a few bars of dated Scorpions music plays -- an uncharacteristically flashy moment for a not so flashy company.

Juniper, long a dabbler in the enterprise, has arrived.

And it's symbolic that Sindhu got to reveal the EX during the company's press and analyst event, held here last Tuesday under the ornate chandeliers of the Palace Hotel. It means Juniper's new mission in the enterprise is one that still involves the old guard, the service provider business that makes up two thirds of its revenues. (See Juniper Storms Into Ethernet Switching.)


It's a changed Juniper that's celebrating its 12th birthday this week. The company has new blood from enterprise giants like Sun Microsystems Inc. . The EX fills a gap in enterprise Ethernet. And it's coming at Cisco Systems Inc. (Nasdaq: CSCO) with a "vision" for the enterprise, one that goes well beyond the NetScreen security products Juniper acquired four years ago.

But some believe Juniper's enterprise attack is still incomplete.

Critics contend the blending of service provider and enterprise markets might not be as easy as Juniper claims, and some wonder whether the company needs different faces near -- or at -- the top as it grows past the $3 billion-a-year mark.

"They live in this nether world right now, sort of half service provider and half enterprise. That makes it tough on them. Sometimes, I don't think they know who they are," says Deb Mielke, principal analyst with Treillage Network Strategies Inc.

The new lingo
Juniper's new tagline for the enterprise is "fast, reliable, and secure." The theory is that businesses rely on networked applications to a point where the network is as vital as blood vessels are to the human body.

And it's true. Enterprises are starting to demand carrier-class features, playing into Juniper's hands. "Juniper has a chance to be disruptive here," says Ray Mota, an analyst with Synergy Research Group Inc.

But go to any John Chambers keynote these days. The Cisco CEO does talk about networks being fast and secure. He follows it up, though, with a message about how video and collaboration are driving business. It's touchy-feely stuff, but some analysts wonder if Juniper couldn't use a little more of it.

"John Chambers is up there telling me I've got to be in video and collaboration, and that the world's going to change. They're tapping into emotion," Mielke says. "People buy on emotion. Even technology people buy on emotion."

In fact, the criticism against Juniper has long been that its technology pitch, which service providers love, doesn't really work in the enterprise. "Part of what they're challenged with is talking to the right audience," says Robert Whiteley, an analyst with Forrester Research Inc. "They're too speeds-and-feeds and product-oriented."

Juniper CEO Scott Kriens concedes as much.

"It's not really about the speeds and feeds, it's about the performance of the applications," Kriens tells Light Reading. "There's no CIO I know who's saying, 'If only I had a bigger box.' They're saying, 'If only I had faster deployment of applications. If only I had more security visibility worldwide on my network. If only I had simpler operations, lower cost of ownership' -- those are the priorities."

At the same time, Kriens rejects the idea that Juniper should emphasize end-uses like video. That's too Cisco-like.

"It's kind of like saying if you buy the satellite from us, you have to buy a television from us as well," he says.

Still, some analysts left Juniper's EX launch wondering how much more could have been said. The problem with "fast, reliable, and secure," according to Yankee Group Research Inc. analyst Zeus Kerravala, is that everybody else has already said it. (See Juniper EX Bits.)

To Page 2

What's the story?
Juniper made the enterprise leap in 2004, buying NetScreen for $4 billion. From there, its enterprise ammunition has come from a scavenger hunt of acqusitions: Peribit and Redline, announced in April 2005 for $337 million and $132 million, respectively, and Funk, bought for $122 million early in 2006. (See Juniper Takes Two: Peribit & Redline and Juniper Gets Into $122M Funk.)

The pieces weren't producing a full enterprise picture, though.

"I can tell you what a Peribit does or what a Redline does, but there isn't a Juniper story," Yankee Group's Kerravala said before the EX event. "Even HP Inc. (NYSE: HPQ), which sells a lot of low-cost equipment, has the vision of Adaptive Enterprise."

There's even been a casualty. Juniper has declared end-of-life for the DX line that came out of Redline. (See Juniper Flatlines Redline.) Critics say the company fell behind competitors with the product. One Juniper official, while not overtly agreeing, says it was a matter of getting too little return for the money the company would have had to put into the DX.

It's just one product line, but Redline is a telling case. "I don't know that it was a leading-edge box when they bought it, and I certainly don't think they have the knowledge in-house to catch it up to the leaders," including F5 Networks Inc. (Nasdaq: FFIV), Citrix Systems Inc. (Nasdaq: CTXS), and Cisco, Kerravala says. "It requires a lot of applications knowledge Juniper doesn't have."

To Juniper's credit, the company is trying to blend its enterprise pieces into one message of high-performance networking. "Those stories," meaning separate Perabit or NetScreen pitches, "are going away, in a good way," says Mark Bauhaus, a former Sun executive who's taken over Juniper's Service Layer Technologies group -- home to the enterprise acquisitions.

The EX Factor
But to make that strategy work, Juniper needed a cleanup hitter: an Ethernet switch to combat Cisco.

Juniper reportedly tried to buy its way into Ethernet. From 2004 onward, rumors of a deal kept resurfacing like an inside joke on Light Reading. Extreme Networks Inc. (Nasdaq: EXTR) kept getting named as a target, and a source has since said a potential deal for Force10 Networks Inc. died on the vine.

Kriens still won't confirm those stories, although he was quoted in 2004 saying he didn't want Juniper getting dragged into Ethernet price wars. (See Juniper Spikes M&A Rumors.)

Today, Kriens says he meant he didn't want Juniper targeting enterprises that want "convenient or cheap" gear. "When we talk about having a $30 billion market opportunity, that leaves about $10 billion of the total market that we really don't see ourselves addressing because they're buying similar products but with different criteria," Kriens says.

Still, the world awaited a Juniper switch. Infonetics Research Inc. analyst Matthias Machowinski notes that some enterprises, unprompted, previously told him Juniper should have one. "They obviously carry some goodwill with customers from the router side, so the key is to seize on that opportunity," he says.

It's not just the equipment. Juniper can't cover all the enterprise bases, as Cisco can; it needs partners in areas like services. But Juniper's enterprise efforts weren't convincing the big names.

"For any large enterprise partner to partner with Juniper, we had to complete the offering with switching," says Hitesh Sheth, the executive vice president of Juniper's Ethernet platforms business group. "It gives them a bedrock."Whether acquisition talks happened or not, we now know that Juniper started the EX project in secret two years ago. It was placed in the hands of Sheth, a former Cisco exec who was running the SLT division then.

Not only did Juniper get its switch, but it got big-name partners, too: IBM Corp. (NYSE: IBM), Microsoft Corp. (Nasdaq: MSFT), and Oracle Corp. (Nasdaq: ORCL) each sent speakers to the product launch. (Cisco's storage-related ambitions might have helped IBM, in particular, decide to find another ally -- see Cisco's Nexus Targets Data Center's Future.)

2452.jpgSo far, Juniper is happy with the DIY results. "It's limited exposure in the early days, but people we have talked to have said, 'We're very glad you did it the way you did it,' " Kriens says.

To Page 3

That new switch is one big checklist item down, but it's not the whole answer. Juniper still has to prove it's got the right mindset for the enterprise.

"They ultimately have to go through a bit of cultural transformation... so the enterprise business doesn't look like it reports to the service provider business," Forrester's Whiteley says.

Talking the talk
An infusion of enterprise blood would certainly help the cause -- and it's one area where Kriens agrees with his critics.

Stephen Elop, hired as chief operating officer a year ago, was point man in that aspect, being a former CEO of Adobe Systems Inc. (Nasdaq: ADBE) But earlier this month, he left Juniper after just one year. (See Juniper COO Elopes With Microsoft.)

Elop's new job at Microsoft includes command of the Office suite, so his departure didn't raise many eyebrows. Juniper might be the major leagues, but Elop's landed a box seat at the World Series.

Juniper's enlisted plenty of other enterprise veterans lately, though: Bauhaus and CFO Robyn Denholm, both from Sun; chief marketing officer Penny Wilson, from Adobe; and Hayley Tabor, a former CA Technologies (Nasdaq: CA) executive now heading U.S. enterprise sales. (See Juniper Names EVP, Juniper Names CFO, Juniper Names CMO, and Juniper Networks Names VP.)

So, a little enterprise culture is being baked in. But that brings up another quirk of Juniper: While Bauhaus claims he's never seen such a well-knit team, certainly not at a big company, Juniper's reputation is that it sheds a new set of top executives almost every year.

It started with Jim Dolce, former CEO of Unisphere, who left around the same time as two other executive vice presidents, Carol Mills and Jef Graham. The following year, Juniper saw Robert Dykes (CFO) and Robert Sturgeon (head of its enterprise group) leave as well. (See Will Juniper Be Burned by the Churn?) Then 2008 opened with Elop walking out.

One theory is that this is just the law of averages at work.

"I think you're seeing what would normally happen," Whiteley says. Cisco loses its share of executives, too, he notes -- witness the high-profile departures of Mike Volpi and Charles Giancarlo, both considered eventual candidates for Chambers's CEO job. (See Giancarlo Quits Cisco, Paddles to Silver Lake and Changes Run Deep at Cisco.) Juniper is smaller and has fewer acquisitions -- meaning it's more noticeable when acquired executives leave, Whiteley says.

But many observers point to another possible cause: CEO Scott Kriens.

"It feels to me like people have a hard time getting along with Kriens," says one person familar with the company's executive ranks. "He's got a big ego. He's a bright guy, but he doesn't like his leadership threatened. He seems to surround himself with people who don't threaten him."

Kriens's involvement in operations, while important when Juniper was smaller, needs to loosen, some say. "Kriens did an excellent job taking Juniper from nothing to $2 billion -- $2 billion, isn't that when Cisco brought in Chambers? -- in a relatively short time," says Kerravala. "But going from an entrepreneurial startup to a broad-based vendor is a big leap."

We put the critics' words in front of Kriens and he denies that his fingers are dug in that deeply. "There's a strong team here capable of executing without needing my micromanagement," he insists.

Kriens also points out that not every executive leaves -- Kim Perdikou, executive VP of Juniper's telecom side, and Eddie Minshull, head of field operations, each have several years with the company. And, of course, Sindhu is still around.

So what's the score so far? Does Juniper need a new leader to go with its new enterprise message?

Not necessarily. Analysts say Juniper needs a separate executive with autonomous control over the enterprise business, which has a faster pace than the service provider side. "Kriens can be the next guy. He just needs a better general," says one analyst requesting anonymity.

But hiring an enterprise-focused lieutenant doesn't seem to jibe with Juniper's rhetoric. That would corral the enterprise business, giving it a definition separated from the service provider world. And Juniper is intent on meshing the two together.

Sources contacted for this story, even off the record, say Kriens should stay at Juniper, and many expressed admiration for what he's done so far.

And if Kriens is not the right guy to lead the new Juniper, it isn't showing in the stock price, which grew 75 percent to $33.20 in calendar 2007. But this year is starting off with a rocky economy and a pledge by Kriens to increase R&D -- to about $700 million from last year's nearly $600 million.

Kriens has the products and partners lined up to face off against Cisco, and an executive team that's beginning to build an enterprise heritage. The NetScreen trial run is over. The EX is here. It's time to find out for sure whether the enterprise world sees things Juniper's way.

— Craig Matsumoto, West Coast Editor, Light Reading

Read more about:


About the Author(s)

Craig Matsumoto

Editor-in-Chief, Light Reading

Yes, THAT Craig Matsumoto – who used to be at Light Reading from 2002 until 2013 and then went away and did other stuff and now HE'S BACK! As Editor-in-Chief. Go Craig!!

Subscribe and receive the latest news from the industry.
Join 62,000+ members. Yes it's completely free.

You May Also Like