Juniper's Ethernet Strategy Emerging
The project, so far unannounced, is reportedly spearheaded by brothers Kumar and Apurva Mehta, engineers recruited to Juniper from Riverstone Networks Inc. (OTC: RSTN.PK). Riverstone has confirmed the Mehta brothers have left the company. Several sources have confirmed they are at Juniper, though it's not clear when they started. (Rumors that the pair had joined Juniper and then left for a startup have turned out to be false.)
Sources are split on whether the project is a card or an entirely new switch/router. The card theory has it that Juniper wants to add more Ethernet density and/or virtual private LAN services (VPLS) to its flagship M-series routers.
The switch/router theorists murmur darkly that Juniper has a new box in the works, possibly something akin to the Foundry Networks Inc. (Nasdaq: FDRY) IMR 640, a high-density system built to pack lots of Ethernet connections cheaply. (See Foundry Strikes at the Core.) Of course, Juniper could create such an animal by loading an M-series router with nothing but Ethernet cards, so it's possible both theories are correct.
Either way, critics have long said Juniper needs a stronger Ethernet story, with products focused on higher density and less Layer 3 functionality. Target customers would include carriers that are putting more Ethernet into their networks and don't necessarily want to pay for the IP functionality they wouldn't need. "To do these MPLS links, you don't need an all-singing, all-dancing router," says Steve Kamman, an analyst with CIBC World Markets.
The result could give Juniper a product pairing similar to that of 's (NYSE: ALA; Paris: CGEP:PA). Alongside the 7750 Service Router acquired with TiMetra Networks, Alcatel offers the 7450 Ethernet Service Switch, an Ethernet-focused alternative that sells at a lower price. Alcatel's triple-play and IPTV pitch focuses on selling both boxes in a two-tiered arrangement. (See Alcatel Pushes Ethernet-Over-MPLS and IPTV Alters Network Landscape.)
The goal, then, is for Juniper to "have a Layer 2 story to compete with Riverstone, TiMetra/Alcatel, and Cisco," says one industry source requesting anonymity.
Juniper officials declined to comment.
For years, the industry has tried to wed Juniper to Ethernet, saying it's the best vehicle for combating (Nasdaq: CSCO) in the enterprise market. Recurring rumors say Juniper wants to acquire Extreme Networks Inc. (Nasdaq: EXTR), Force10 Networks Inc., or Foundry -- or more recently, Atrica Inc. -- and while sources insist such talks are more than superficial, no deals have been consummated. (See Would Juniper Go to Extremes?, Extreme Thoughts, and Juniper Shopping for Atrica?.)
Ethernet connectivity is gaining in importance. IPTV efforts will likely rely on high densities of Gigabit Ethernet feeds shunted around the network. And carrier-class Ethernet has become a hot topic in general, with the Metro Ethernet Forum (MEF) launching certification programs as a first step toward interoperability among vendors. (See MEF Rubber Stamps Ethernet Gear and MEF Adds Carrier Certification.)
Carrier Ethernet could be what's motivating Juniper. An August Heavy Reading report, "Carrier Ethernet Equipment Market Outlook," notes that Juniper offers the M320 router as a multiservice edge platform but lacks a corresponding carrier Ethernet switch/router. Juniper so far has been "more than happy to partner" to fill that gap, teaming with (NYSE: SI; Frankfurt: SIE) and its Ethernet switches, or with (Nasdaq: ERICY) or (NYSE: LU), which resell switches from other vendors, analyst Stan Hubbard writes. (See Carrier Ethernet Forecast: Extended Heatwave.)
The catch is that Ethernet could be a millstone on Juniper's gross margins. CEO Scott Kriens has said he doesn't want Juniper embroiled in the price wars commonly associated with Ethernet -- an argument that he's used to try to defuse those acquisition rumors. (See Juniper Spikes M&A Rumors.) Any Juniper foray into Ethernet, then, would likely be a carefully managed effort.
"A lot of this business is going to companies that are willing to compete on price for these aggregation devices. Juniper is not willing to compete on price. They're one of these companies that's willing to walk away from business" if prices drop too low, says Mark Seery, an analyst with Ovum-RHK Inc.
— Craig Matsumoto, Senior Editor, Light Reading