HPE announced this week its intent to acquire Juniper Networks for $14 billion. When this deal closes, Juniper will combine with HPE's Aruba Networks division, which is itself a product of multiple acquisitions by HPE, including Aruba Networks (Wi-Fi and switching) and Silver Peak (SD-WAN and WAN optimization).
There is a great deal of overlap between HPE Aruba and Juniper, but there are a lot of complementary pieces, too. There are implications for both enterprise and service provider customers. As an analyst, I focus on enterprise networks, so that's where I'll focus most of this post.
Here's what enterprise customers need to know.
HPE Wants to be Mist-ified
Juniper's 2019 acquisition of Mist was a turning point for the company, and it's a huge factor in HPE's decision to acquire Juniper. Mist was a Wi-Fi startup that developed artificial intelligence and machine learning (AI/ML) technology to streamline and automate Wi-Fi management, including the development of Marvis, a conversational "network assistant" that allows network managers to "talk" to the network. "Hey Marvis, are any of my access points in Tacoma having problems today?"
After acquiring Mist, Juniper soon extended this AI technology to its own EX campus switches. More recently it extended it to its software-defined WAN (SD-WAN) product. As Juniper did this, sales of its enterprise networking products surged. Juniper's proven ability to extend its existing AI-based network management platform to new products and new domains obviously caught HPE's attention. HPE and Juniper executives described plans to integrate Mist AI with HPE's own Aruba Central, its SaaS-based network management solution. HPE has been developing its own AI capabilities for network management, but Juniper's leadership in this domain will catapult HPE forward.
JUNOS is a Crown Jewel
HPE Aruba has a young-ish network operating system (AOS-CX) powering its switches. Now HPE will bring on board JUNOS, which Juniper customers typically revere as a powerful OS for switches and routers. Some were voicing concerns about the future of JUNOS. I asked HPE CEO Antonio Neri and Juniper CEO Rami Rahim (who intends to stay as head of HPE's networking division) about this issue.
Rahim stated unequivocally that JUNOS remains the "crown jewel" of Juniper's technology portfolio, and he noted that it is essentially the "operating system of the internet" given the number of Juniper routers deployed in service provider networks today. The message was clear. JUNOS is here to stay. In fact, Juniper has developed support for third-party switches in recent years, so I can imagine a scenario where HPE offers customers the opportunity to run JUNOS on Aruba switches as the company rationalizes the overlaps in the two companies' hardware products.
Product Overlap is Significant
I expect it will take a couple years for HPE to resolve the product overlap it has with Juniper. Neri and Rahim downplayed this issue during a webcast for press and analysts. In term of hardware, i agree to some extent. Software is another matter.
First, there are the Wi-FI and campus/branch switching products. Both vendors have a lot of customers who are dug in with their chosen products. It's unclear to me how the companies will navigate this, but it will take time. Hardware consolidation will ulimtately happen, but the path they take on the software side of things will be more complicated. Customers develop a lot of specialized skills around network vendors' operating systems.
Both companies have data center switching products. I don't track market shares very closely, but I believe that Juniper has many more customers than HPE, so that may ultimately decide this situation. HPE has developed some differentiated capabilities that are worth preserving. For instance, it's leveraged Pensando smartNIC technology to develop distributed services support in its switches. Essentially, customers can run load balancers, firewalls, and other functions on specialized silicon embedded in Aruba data center switches. This allows data center teams to run high-performance services at the edge of the network, an alternative to running centralized appliances (which creates architectural complexity and inefficiencies) or deploying virtual services on servers (which can lack performance). I expect HPE will enable JUNOS to support this capability.
Finally, both companies have an SD-WAN solution. Here, HPE's product (based on its Silver Peak acquisition) is much more established, with many more customers. I believe HPE may try to incorporate some of Juniper's differentiated SD-WAN capabilities (e.g., the session-based routing technology it acquired with 128 Technology) into Silver Peak and then retire Juniper's product.
Customer Support
I heard from some Juniper customers who were worried about how customer support would be impacted by this acquisition. I asked Neri and Rahim about this. Neri said HPE has always let its networking division maintain an independent customer support organization, with the goal of providing "white glove" service. The intent is to follow that strategy with Juniper.
When the acquisition closes, enterprise customers should keep an eye on this. Many probably have relationships with tier 3 support engineers. Will those familiar faces stick around or leave? Will customer support remain easy to navigate or will there be hurdles to jump over? One thing to note is that Juniper has leveraged its AI technology to automate and streamline customer support, with lots of proactive engagement. That could translate to and enhance the support organization of HPE Aruba's existing support organization.
Final Thoughts
This post obviously doesn't cover everything. The service provider businesses of the two companies is a huge factor in this deal, for instance. Also, HPE gains a very strong network security business with Juniper's SRX firewall. But I don't think this acquisition will be very disruptive to customers of any of these products.
Instead, I've tried to offer some insight and guidance to HPE and Juniper enterprise customers who are feeling uncertain about this news. We'll continue to track how this deal shakes out. In the meantime, feel free to reach out to me if you have any thoughts or questions at shamus@emausa.com.
