Juniper's GGSN Gamble?
Yes, say analysts, particularly if the company's relationship with Ericsson degenerates because of Juniper's acquisition of Unisphere Networks Inc. (see Juniper Nabs Unisphere for $740M). That buyout gave one of Ericsson's bitter mobile infrastructure rivals, Siemens AG (NYSE: SI; Frankfurt: SIE), a stake of nearly ten percent in the newly merged networking company (see What to Expect From 'Junisphere').
"I think it is likely," says Mark Bieberich, senior analyst of communications network infrastructure at Yankee Group, about the prospect of Juniper building its own wireless routers, which are called gateway GPRS service nodes (GGSNs) in GSM-derived networks and packet data service nodes (PDSNs) in CDMA networks.
"When it is likely is hard to say," according to Bieberich. "Given the resources within Juniper today, they certainly have the capability of developing a GGSN in house."
Wireless routers, which link next-generation GPRS and CDMA2000 radio networks to the IP backbone and enable carriers to develop new data services, are one of the few IP networking markets that are likely to grow in the short term. This is why the mobile space is so interesting for Juniper, which is number two in IP networking after Cisco Systems Inc. (Nasdaq: CSCO), according to Bieberich.
Juniper's joint venture with Ericsson (see Juniper Unveils 'Wireless Router') gives the Swedish vendor exclusive rights to resell the J20 GGSN. If Juniper wants to address a larger market, Bieberich says, it will have to develop an own-brand product.
Ted Jackson, senior research analyst at U.S. Bancorp Piper Jaffray agrees that Juniper could now build a wireless router. But he says the company's desire to go it alone may depend very much on the how its venture with Ericsson works and how the issues surrounding Siemens and the Unisphere acquisition shake out.
Jackson says he has been "pleasantly surprised" by the sales of the J20. Unstrung spoke to a number of analysts about the revenue derived from the J20; and most agreed that the box did about $5 million in sales last quarter, a figure that is expected to increase over the next couple of quarters.
Any moves by Juniper to develop a wireless router for the wider market could put the kibosh on the Ericsson JV. "I think that would piss Ericsson off," Jackson says.
But how happy can Ericsson be now that Siemens has a stake in its erstwhile partner? The German vendor also resells mobile infrastructure kit based on Unisphere's ERX products.
"It is hard to say," agrees Yankee's Bieberich. "It certainly raises some questions about Juniper's future."
Questions that Juniper isn't keen to answer at the moment. We called Juniper about its mobile strategy for several days without success and were eventually told to email the firm our questions. Juniper said today that it couldn't answer those questions because they were "premature." [Ed note: It's alright, Dan, it happens to every journalist sometimes, its nothing to be ashamed of…] — Dan Jones, Senior Editor, Unstrung
http://www.unstrung.com
Ericsson would like to keep the J20 exclusive. But that short-sightedly limits Juniper's ability to sell the product in other situations, which in turn limits the development investment that Juniper can justify.
Siemens would like to keep the Unisphere GGSN alive, since they don't have access to the J20. But under current market conditions, maintaining two separate GGSN developments would overtax Juniper's budget, and Siemens would end up with an uncompetitive second-fiddle product.
Juniper would like to keep both Ericsson and Siemens as channels, but must resolve the dilemma of two platforms. Since Ericsson has more market share than Siemens, and because the Ericsson relationship is more developed with mobile customers, Juniper will probably choose the J20. Whether explicit or not, Siemens is left out in the cold. Or perhaps the Siemens equity stake in Juniper overrides these business considerations, and Ericsson is left out in the cold.
Either way, one of these companies (or both, if the Juniper product is uncompetitive, as suggested by recent Unstrung posters) will soon be looking for a new partner, perhaps Cisco or one of the three start-ups: Megisto/Tahoe/Watercove. Meanwhile, the customer confusion in Ericsson and Siemens accounts leaves a vacuum, which I'm sure Alcatel, Lucent, Nokia, and Nortel seek to fill.
In any case, the Juniper/Ericsson/Siemens love triangle should continue generating quite a soap-opera story line for months to come.