Juniper needs to redouble its efforts to win MNOs June 30 2015

BY CAROLINE GABRIEL

Juniper Networks' chances of being acquired by Ericsson, or any other large vendor, look slim now that the Swedish firm has said it will not counteract the Nokia/Alcatel-Lucent deal with a major takeover of its own. And if Nokia's mega-merger gets approved, we can presume that some of Juniper's alliances with the Finnish firm - increasingly important to its efforts in the mobile operator market - will be diluted or ended. So what will Juniper's strategy be, to make itself noticed by the MNOs?

The firm has multiple challenges in this market, but it is essential that it makes an impact on it - as MNOs converge with fixed-line carriers, and mobile services increasingly become the primary driver of network investment, this is no longer the cadet branch of the service provider sector. Yet Juniper must deal with the shift of the whole carrier base towards software-defined networking (SDN), a fundamental shift; the strengthening of ALU, a serious rival in routers, via Nokia's ownership; and the stagnation of some of the enterprise bases where it is well entrenched.

 CEO Rami Rahim, who took the helm in November after his predecessor left under a cloud, insists he is not looking for major acquisitions to turn Juniper around, though he may fill gaps with smaller ones, or with partnerships like the newly announced WiFi deal with Ruckus Wireless. Nor is further major restructuring on the cards, Rahim said in a recent interview with the Silicon Valley Business Journal. Now the company's fortunes are all about "innovation", he insisted - but highly targeted innovation, designed to steal a march on Cisco in certain key areas.

The overall focus is on agile and scalable cloud-based service delivery architectures, whether physical, virtualized or hybrid, particularly for service providers and government or financial organizations.

There were signs of optimism, after a year of turmoil, when Juniper turned in a better-than-expected first quarter, though analysts at JP Morgan quickly put out a client note warning that product revenue growth would be "modest" in 2015. This is partly because Juniper is rolling out a wide range of new offerings, which will take time to bed in. In Q1, these included the QFX10000 family of spine switches.

During the current quarter, major announcements have included the latest core router, the PTX1000, announced this week, and the deal with Ruckus, a bid - perhaps a last-chance one - to stay relevant in enterprise and carrier WiFi.

The PTX1000 shows Juniper's difficult balancing act in terms of focusing its development resources and its message - between scaling up its cloud delivery platforms, to be able to handle massive quantities of data, security and applications; and scaling down its physical internet core, an important differentiator since 2012 when Juniper unveiled products to push routers out to the edge, unify wired and wireless access, and even replace some backhaul links.

However, as the network simplifies and the physical core shrinks - while value and competitive edge shift to SDN - Juniper will have to deal with a significant change in revenue mix and margins.

The PTX1000 is a compact, 3Tbps model powered by Juniper's recently announced ExpressPlus chipset. It is designed particularly for distributed peering between operators, which Juniper says cuts response times for applications and increases the reliability of mobile and fixed access, compared to consolidated peering points.

Meanwhile, the Ruckus deal highlights other important aspects of Rahim's strategy - to extend platforms created for the enterprise, from LANs to SDN, into the carrier world rather than treat the two markets separately; and to rely on partners, not inhouse developments, for far more product lines, concentrating internal resources on the core platforms.

Juniper has been left out in the cold by recent M&A activity in the network infrastructure market, but it is going some way to compensate by forming an alliance with carrier WiFi leader Ruckus Wireless - its third WLAN partnership after deals with Trapeze and Aruba.

The deal is likely to replace Juniper's current enterprise WiFi partnership with Aruba, which is being acquired by Hewlett-Packard, probably depriving the router vendor of an important ally in its war against Cisco. HP's move has sparked several knock-on deals already, including Fortinet's acquisition of Meru and a partnership between Aerohive and Aruba reseller Dell.

Ruckus has some useful qualities to help Juniper stay relevant. It is seen as the most aggressive and innovative of the WiFi independents (especially since Ericsson acquired rival BelAir). With its heavy focus on carrier WiFi (it is leading the charge to support Next Generation Hotspot, for instance), it will also offer Juniper a stepping stone into service provider WiFi. It only had 3.3% share of the overall $9bn WLAN deployments market last year, according to Dell'Oro, putting it in seventh place - at least well ahead of Juniper, which was estimated to have 0.5% and only about $36m in revenue. In enterprise and outdoor, Ruckus was in second place behind Aruba with 7%, though its strengths are greatest in the latter sub-category.

In effect, Juniper is backing away from offering its own WLAN products and concentrating on its new partner to fill that gap and therefore to facilitate more sales of products such as LAN switches (a sector in which Juniper was in fourth place last year, Dell'Oro says, with 3% share).

The companies will work together to sell carrier-grade WiFi products to large and medium enterprises. Their offering will be built around Ruckus's ZoneFlex access points and SmartZone WiFi management platform, plus Juniper's EX Series Ethernet swtiches, plus tools and services in security, BYOD (bring your own device) provisioning and onboarding, and network management. These will be based on Juniper's Open Converged Framework, to allow for integration with third party equipment and software.

The partners cited Gartner research predicting that enterprise WLAN spending will rise from $5.3bn this year to $7.8bn by 2019, worldwide.

Dan Rabinovitsj, Ruckus's COO, said: "Juniper Networks provides the wired infrastructure critical for serving as the backbone for the Smart WiFi networks we deliver." Jonathan Davidson, general manager for development and innovation at Juniper, added in the statement: "Building on Juniper's Open Converged Framework, teaming with Ruckus ensures carrier-grade levels of scale and performance through our interoperable wired and wireless solutions to solve the WiFi capacity and coverage challenges that our enterprise customers face."

Juniper has been moving away from creating its own wireless products inhouse in order to focus on its core switch and router business and the important migration to software-defined networking (SDN). Those priorities have made homegrown WiFi a distraction, especially as Juniper's acquisition of WLAN access point maker Trapeze in 2010 did not yield the results it had hoped for.