- The recent agreement strategically aligns with HPE’s networking sector ambitions, harnessing Juniper’s expertise in artificial intelligence, notably through its Mist AI service.
- According to Managing Partner of CloudStrategies Kaldenbaugh, the acquisition of Juniper Networks by HPE is less about exploring new technological frontiers and more about fortifying its existing market position.
In a specialized analysis conducted by theCUBE Research, industry specialists evaluate the recent confirmation by Hewlett Packard Enterprise Co. of its acquisition of Juniper Networks Inc., amounting to approximately USD 14 billion.
This strategic acquisition, marking HPE’s most significant since the purchase of Autonomy Ltd. in 2011, is anticipated to effectively double the scale of its networking business. As a result, it is expected to play a substantial role in contributing to HPE’s annual operating income. This agreement strategically aligns with HPE’s networking sector ambitions, harnessing Juniper’s expertise in artificial intelligence, notably through its Mist AI service. This service improves wireless access and network security, positioning HPE in the growing AI and cloud-native market segments.
“From HPE’s standpoint, the marriage of HPE and Juniper makes a lot of sense,” said Dave Vellante, theCUBE Research analyst. “HPE’s got silicon chops going back to pre-split. If you think about HPE’s as-a-service portfolio, they have compute down with their service business, they’ve got Aruba, and now they’re adding in Juniper. They’ve got storage.”
Strategic Expansion or Market Consolidation?
According to Jake Kaldenbaugh, Managing Partner at CloudStrategies, the acquisition of Juniper Networks by HPE is less about exploring new technological frontiers and more about fortifying its existing market position. It’s seen as a consolidation play, aiming to unite and capitalize on the strengths of both companies, according to Kaldenbaugh.
According to the panelists, the pending deal is a strategic move to enhance HPE’s edge-to-cloud capabilities and better compete against industry giants like Cisco Systems Inc.
“If you look at the market and you look at the technology synergies between HPE and Juniper in this deal, particularly how their combined portfolios can put innovation back at the center of HPE’s strategy — specifically in AI and cloud-native environments — this acquisition is expected to double HPE’s networking business, creating a formidable position play against Cisco and others well,” Furrier stated.
Future Strategies: From Boxes to Cloud
The panel acknowledged the innovation potential, particularly in AI and security assets, but recognized that the acquisition could be seen as a consolidation play in line with prevailing industry trends. The consensus among the panelists is that while the acquisition strengthens HPE’s portfolio, there is an imperative for HPE to shift focus from traditional hardware-centric approaches. This emphasizes the importance of embracing software and cloud-based solutions, especially in the evolving industry.
“The problem with what they’re doing it’s very much focused still on the physical world of networking, boxes,” he said. “It shifted from boxes to software and cloud about five years ago. They won’t have the growth until they actually start going after where the growth is, which is in the cloud. The growth will come when they really, truly understand that this is a cloud-centric, cloud-first kind of world.”
Scale in the networking industry emerges as a critical aspect in evaluating the acquisition, as highlighted by Zeus Kerravala, Founder and Principal Analyst at ZK Research. The merger has the potential to create a formidable entity, enhancing competitiveness against dominant players like Cisco. This viewpoint considers the historical challenges that HPE and Juniper have encountered in expanding their market share.
As both companies’ stocks exhibit lateral movement, it becomes evident that competing in a market dominated by a heavyweight like Cisco poses a considerable challenge. In networking, where size greatly influences a company’s capacity to cater to large global clients, this merger appears to be a strategic maneuver to establish a more formidable competitor.
“If you combine the two companies together, you get, in theory, a much bigger company that can compete with Cisco,” noted Kerravala, summarizing the deal’s potential to reshape competitive dynamics in the networking sector. The analysis emphasizes that the merger is not merely a strategy for growth but a proactive move to secure relevance and competitive parity in an industry fraught with challenges.