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Optical/IP

Juniper's 'Pepsi' Set to Pop

Juniper Networks Inc.'s (Nasdaq: JNPR) low-end router line, code named "Pepsi," is ready for launch, according to a research note released yesterday.

Three routers in the family are going to be introduced next week, ranging in size from 8 Mbit/s to 96 Mbit/s, writes analyst Steve Kamman of CIBC World Markets.

Officially called the "J" series, the routers correspond to Cisco Systems Inc.'s (Nasdaq: CSCO) 1700, 2600/2700, and 3600/3700 lines, Kamman writes. That's along the lines of what has been expected since news of Pepsi emerged earlier this year (see Juniper: The Other Cola? ).

Juniper officials declined to comment.

Based on figures from the Dell'Oro Group, Kamman estimates the low-end and "low/mid-range" router market at $2 billion to $2.5 billion. But he also notes it's an area where Cisco holds about 90 percent market share. Once the J-series becomes available in the second half of 2004, Kamman believes Juniper will face some heavy lifting in terms of distribution. The company also will have to put resources into training its new enterprise customers.

"It will be hard slogging to change hearts and minds -- although Juniper’s street-credibility gives it a good jumping-off point," he writes. "As such, we would not expect to see rapid market share gains. If Juniper does gain traction in this market, it will likely come gradually."

Kamman expects Juniper to integrate security and traffic management from NetScreen Technologies into the J-series, a factor which he believes was "one of the key motivators" for the $4 billion NetScreen acquisition (see Juniper Buys NetScreen).

— Craig Matsumoto, Senior Editor, Light Reading
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green 12/5/2012 | 1:36:16 AM
re: Juniper's 'Pepsi' Set to Pop hi,

jnpr products have been pricier than csco when you look at port density. port density is important in enterprise. so it will be interesting to see how they compete with csco in enterprise. the market is riddled with dead bodies of companies who tried to dislodge csco in the enterprise.
andropat 12/5/2012 | 1:36:05 AM
re: Juniper's 'Pepsi' Set to Pop This will be interesting. I think Juniper is being given too much credit right now when these articles say they will compete with Cisco in the "enterprise". Cisco is HUGE! Five years ago everyone kept saying that Juniper hit Cisco where it hurts in the ISP space by taking around 30% market share. They did that via the elements of surprise, stealing key developers from cisco, stealing a bunch of Ciscos talented Sales Managers that called on these huge customers, etc.,

I don't think cisco will be caught again in the enterprise which in my opinion is truly their "Core" market. Juniper will have a much harder time because the engineers in the enterprise are no where near as smart as those in carrier and they all love their CCNA titles and Cisco coffee mugs.

In my opinion, Juniper has broken the foot of the 800-lb Gorilla but the true battle is just beginning. I wish them luck! It will be fun to watch and I actually hope they kick some ass because then history will truly be made! Lovin' the underdog.

Pat
markjohn20 12/5/2012 | 1:35:58 AM
re: Juniper's 'Pepsi' Set to Pop
'...engineers in the enterprise are no where near as smart as those in carrier and they all love their CCNA titles and Cisco coffee mugs.'

Nooooooo, don't kid yourself- if by 'smart' you mean not as knowledgable about carrier routing/technologies then of course that's the case, but a blanket statement that carrier guys are smarter is ludicrous!

Enterprise guys, of course, spend a lot of their time tinkering with Windows boxes, and their knowledge of routing is often lacking. This can sometimes lead to them being overly impressed by Cisco CCNA/NP exams, but...

(and yes, I have consulted extensively in both environments)
DocGonzo 12/5/2012 | 1:35:57 AM
re: Juniper's 'Pepsi' Set to Pop
I think there is a bit of generalization of JNPR attacking CSCO in the "Enterprise". Clearly they are taking steps to engage CSCO beyond the original JNPR scope of the "Telco" space. However, I think "Pepsi" is a calculated move to enter a market that seems to parallel the dynamics of the Core Routing market circa their 1998 entry into that market.

The article points out that the low-end and "low/mid-range" router market is at $2 billion to $2.5 billion. And, it's an area where Cisco holds about 90 percent market share. Until 1999, CSCO had a similar stranglehold on the Core Routing space although it was not nearly as large in revenue $. Some would argure that the CR space had even greater barriers to entry than this lower end market. JNPR has survived and prospered in the CR space; a place where many others continue to fail.

Merely putting out a box with their name and OS will not make this a runaway or even enduring success. Out of the gate, the products will need competitive (or better) functionality and pricing to get any serious consideration. Additionally, JUNOS is probably lacking many desired features available in IOS trains. It also will be interesting to see their approach to overcoming the IOS command line familiarity in the Enterprise.

Starting up a new product line from quantity zero puts significant expectations on rapid sales volume to get into a respectable gross margin. As for distribution, the NSCN team has channels better aimed at the Enterprise which should help. I expect that many Telco's are interested in a competitive alternative to CSCO for re-sale to their customers. Also, JNPR's partners are likely lined up to help with sales to their customers. This is probably enough to get them some decent momentum.

JNPR will need to sustain a meaningful amount of marketshare to survive in this low/mid end market. I may be wrong, but would guess that number should ramp to >20% within 18-24 months. Especially considering that CSCO has incredible leverage to put pressure on any product/market they desire to win.

"Pepsi" is probably one of several thoughtful and focused entries JNPR will make into CSCO's dominant markets in the future. Look to other areas that CSCO has an unhealthy (>70%) market share, and where JNPR can leverage their strengths in technology and corporate infrastructure. Much different strategy than a wholesale attack on the "Enterprise" and with better probablility of success.

Doc
alexandross 12/5/2012 | 1:35:45 AM
re: Juniper's 'Pepsi' Set to Pop '...(and yes, I have consulted extensively in both environments.)

Possibly off topic but I would be interested in your opinion of the enterprise guys area of experise, with regards to carrier/service provider technologies (such as MPLS and what ever comes with it), especially if you think that a lot of carriers are trying to sell these technologies to enterprise customers.

alex
markjohn20 12/5/2012 | 1:35:42 AM
re: Juniper's 'Pepsi' Set to Pop Funny you mention this - as I mentioned, I have been involved in designing & building MPLS VPNs (on the carrier side!), and recently have been involved with spec'ing MPLS VPNs for very large (global/multinational) enterprises (from net assessment through writing the rfp through selecting the carrier through migrating the WAN for the enterprise).

In the enterprise environment I have found that the techies/management know that MPLS is 'hot' but don't really understand it or what it can do.

There may even be some concern that it'll be a new technology that they have to deal with (they are often unaware that it should be a 'transparent' service [requiring no mpls expertise on their part]). The fact that they don't have to know much if anything about mpls to take advantage of mpls vpns often has to be explained to them.

Enterprises are often not really aware of why mpls vpns *can* be such as good idea - they don't really know that it can give them any-to-any (assuming rfc2547bis mpls vpns) connectivity; they don't understand that it can enable true multiservice applications (what with the site-to-site delay/jitter/packet loss guarantees that the carrier can give them); and they often don't understand that the cost savings can often be very great either in absolute terms or when all the additional functionality is added in.

I personally think that once you have explained the advantages in respect of their network *in particular*, and shown them how they can appear like a star to their board of directors/boss then you can really get them on board with regard to moving into this 'brave new world' :) of mpls/multiservice networks. If they don't really understand the advantages with regard to *their* network then they will often bail out before it comes to the point of explaining to their boss why they want to completely migrate their company network to a new wan infrastructure.

So, enterprise guys are definately not stupid - just like anyone, they need to have things (carrier/sp technologies) explained to them. And the more that you can tie that in with specific examples regarding their own network, the better.

Is that what you were getting at??! Or did I go off in entirely the wrong direction :)

Mark
blank_reg 12/5/2012 | 1:35:41 AM
re: Juniper's 'Pepsi' Set to Pop Normaly Enterprise guys focus on security and applications. They complain that carrier guys know nothing about security, virus attacks, and worms. Also things like load balancing, storage, wireless, and Vo/IP seem to be the domain of the enterprise. Carriers are good at providing pipes, not always clean pipes, but dont know much about the data.

If the Juniper boxes have no built in firewall or encryption, no enterprise will bother with them

My .02 cents

Reg
markjohn20 12/5/2012 | 1:35:39 AM
re: Juniper's 'Pepsi' Set to Pop Yep, I agree with the focus on applications- enterprise guys are interested in enabling *end-user* applications.

Cisco's IOS for all its failings is absolutely packed with enterprise focused functionality - whether newer stuff like voip, or older stuff like dlsw.

If Juniper thinks that they can sell a SP box into an enterprise then they'll have problems - just having one or two features such as NAT will not be enough IMHO. So, I'm really interested to see what functionality they will add to junos to enable enterprise functionality.
phuturex 12/5/2012 | 1:35:37 AM
re: Juniper's 'Pepsi' Set to Pop How many enterprise engineers does it take to screw in a light bulb?
materialgirl 12/5/2012 | 1:35:36 AM
re: Juniper's 'Pepsi' Set to Pop If JNPR comes in and solves one or two big problems, is that enough? By putting in JNPR gear, can you actually do VoIP or get "good enough" security? Are these killer apps?

By coming in late, JUNOS does not have the multiprotocol baggage of IOS, so perhaps they can add more "modern" and relevant features.

Perhaps you can use more than one box to get your other features.

Finally, the network seems increasingly diffuse. If the network is defined as who is on an end-to-end connection, will the buyer of gear change? Will metro gear look like enterprise gear? If enterprise guys do not want to learn this IP stuff, and service providers want some profitable service, who will actually buy this stuff?
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