Juniper Networks Inc. (Nasdaq: JNPR) and Unisphere Networks Inc. are weeks away from finalizing their $740 million merger (see Juniper Nabs Unisphere for $740M). As the dust settles, analysts and other industry observers have been speculating on what will happen next (see Juniper's Kriens: Merging Along).

Two big questions remain unanswered: What will happen to the companies’ competing edge routing product portfolios? And what will happen to Juniper’s relationship with Ericsson AB (Nasdaq: ERICY), now that Siemens AG (NYSE: SI; Frankfurt: SIE) will own almost 10 percent of Juniper?

Neither Juniper nor Unisphere is saying much so far. Both companies declined to comment on speculation regarding the product roadmap.

There’s no question that Juniper bought Unisphere for its IP edge routing. Juniper had focused on the IP core and did a good job in that market. Then it essentially came to the edge market with a core box in a small form factor, creating its M5 and M10 edge routers. As demonstrated by its lag behind Cisco Systems Inc. (Nasdaq: CSCO) and Unisphere in market share for edge routers, this strategy has not been a rousing success.

As a result, Juniper will likely market Unisphere's more successful ERX platform as its premier edge router. But what about Juniper’s own M5 and M10 routers? And what will happen to Unisphere’s new multiservice switch router, the MRX? All three of these products could be in jeopardy, say sources following the company.

"As of Supercomm two weeks ago, no firm decisions had been made," says Frank Dzubeck, president and CEO of Communications Network Architects. "But some products will end up going away."

One potential plan has Juniper repositioning the M5 as an enterprise router and phasing out the M10 router. In this scenario, Juniper might sell the M5 to large enterprises in an attempt to eat away at Cisco’s market share. To do so, Juniper could leverage its newly firmed-up relationship with Siemens. While this idea may sound good on the surface, the logic is full of holes, says Dzubeck.

For one, selling to the enterprise requires a different set of skills and a different sales team. Even if Juniper were to use Siemens's sales channel, it would be a different sales force from the one that Unisphere used to land accounts in Europe. Furthermore, going after the enterprise market goes against everything Scott Kriens, Juniper’s CEO, has preached over the last few months. On numerous occasions he has publicly criticized "competitors," i.e. Cisco, for trying to play both sides of the fence (see Juniper's Kriens Gives Hope).

"The enterprise is an entirely different business and requires a different set of skills and product requirements including software," says Dzubeck. "You can’t just morph a product to target a new market like that. It’s just not the way it works."

Another idea making the rounds is that Juniper is planning to kill Unisphere’s MRX multiservice edge router. The MRX can handle both IP routing and native ATM switching on the same platform (see Unisphere Cutting the Edge). It has a routing capacity of 320 Gbit/s, which is higher than Juniper’s flagship core routers, the M40 and M160. But because of its multiservice functionality, it would likely not be used in the same part of the network as the core routers.

The MRX competes with products from Lucent Technologies Inc. (NYSE: LU) and Alcatel SA (NYSE: ALA; Paris: CGEP:PA), as well as startups like Gotham Networks and Laurel Networks Inc. Some view the addition of the MRX to the Juniper lineup as an asset and a good opportunity for Juniper to expand into another market; but some analysts say keeping the MRX will spread the tightly focused Juniper too thin.

"I’m just not sure that they want to go down that path," says Kevin Mitchell, an industry analyst with Infonetics Research Inc.. "A new market means more competitors and more marketing dollars spent trying to sell it. I just think it would expose them on too many fronts."

Other experts believe that the decision on whether or not to keep the MRX will likely be driven by market conditions. Two or three quarters ago, there was quite a lot of talk among service providers about using multiservice switches to replace private line circuits. Over the past few months, however, that integration path seems to have slipped in priority among RBOCs, says Stephen Kamman, an equities analyst with CIBC World Markets.

"If Juniper sees multiservice switching as a market that is really going to take off, then I’d say they’ll hang onto the MRX," he says. "Otherwise, I can’t see them doing much with it."

Then there is the relationship between Juniper and Ericsson to consider. Siemens is expected to own about 9.5% of Juniper after the merger, and this could cause a conflict between Juniper and Ericsson, its largest partner (see Ericsson: Every Vendor's Best Friend). Ericsson has been instrumental in reselling Juniper routers in Europe and the two companies are also co-developing routing and wireless gear. The first product to come out of this joint venture, GGSN J20 mobile/wireless router, was announced in February 2002 (see Juniper Unveils 'Wireless Router').

Juniper says the reseller agreement will be similar to other agreements it has done in the past. Siemens will have rights to sell both Unisphere and Juniper Networks products worldwide on a non-exclusive basis.

"We don't see any impact on our long term distribution relationship or mobile joint venture with Ericsson," says a Juniper spokesperson. "Ultimately, this is a win win for everyone. Ericsson gets to add the Unisphere product line to its offering, while Siemens gets to enhance its Unisphere edge routing offering with a comprehensive IP solution."

And if history is any judge, this should not be such a big problem. Siemens pulled Unisphere into accounts in many instances, especially in Europe, as in the Deutsche Telekom AG (NYSE: DT) account. But Unisphere was also free to partner with other large telecom companies. In fact, it worked with Ericsson to provide edge routing to Australian carrier TelstraClear (see Unisphere Wins Down Under).

If Ericsson and Siemens can accept each others' partnerships, it would prove a windfall for "Junisphere." The company would then have strong ties to two out of the four largest European telecom equipment companies. Nokia has partnered with Redback Networks Inc. (Nasdaq: RBAK) for edge routing and has an agreement with Cisco for core routing.

"Whatever happens," says Infonetics' Mitchell, "it will definitely be interesting to see."

— Marguerite Reardon, Senior Editor, Light Reading
http://www.lightreading.com