HPE + Juniper Networks – what the analysts say

• HPE is buying Juniper Networks in a deal valued at $14bn
• The need for HPE to add additional AI capabilities has been widely cited as a key reason for the M&A move
• But there’s plenty more to consider
• Industry analysts have been sharing their views

Industry analysts have been sharing their views on Hewlett Packard Enterprise (HPE)’s planned $14bn acquisition of Juniper Networks, which was announced this week, and the overall views are positive, despite product overlap and some less than compelling financials. 

“The Juniper acquisition complements HPE’s acquisition of Aruba in 2015, adding enterprise-grade router and firewall products to HPE’s broader networking portfolio,” notes James Sanders, principal analyst at CCS Insight. “HPE’s stewardship of Aruba over the past 8 years should be encouraging to existing Juniper customers, particularly as Juniper CEO Rami Rahim is staying on to lead the combined networking business unit. Overall, the two product portfolios are more complementary than competitive. On this basis, it appears [to be on course for] an easier journey through regulatory approval than other recent large deals. The key component for HPE in this transaction is Mist Systems, which Juniper acquired in 2019 for $405m. Mist Systems developed an AI-powered software-defined networking platform used to simplify network automation, particularly for improving performance of enterprise Wi-Fi networks. Of note, Wi-Fi performance and reliability was the highest-ranked concern among enterprises with a hybrid working model in CCS Insight’s 2023 Senior Leadership IT Survey,” added Sanders. 

Over at research house GlobalData, Steven Schuchart, principal analyst covering enterprise technology and services, comments: “The combination of HPE and Juniper will create a compelling end-to-end offer comprising server, storage, cloud, networking and high-performance computing all in the context of Juniper’s advanced AI. Customers are looking for security and operational efficiency, in that order. Juniper brings more security to HPE, and AI-driven automation using its Mist AI. The combined companies will be of a size and capability to challenge Cisco and Huawei internationally,” Schuchart states boldly. And then there’s the telecom angle. “The proposed acquisition will significantly boost HPE’s presence in the telecom network equipment provider ecosystem,” notes Emir Halilovic, research director for telecom technology and software at GlobalData. “On the other hand, it completes a successful transformation of Juniper into technology provider to cloud service providers, telcos, and enterprises – with telco likely playing a secondary role for HPE networking business going forward,” he adds. 

Research house Dell’Oro Group has shared multiple takes on the potential of the takeover deal. Sameh Boujelbene, who oversees research in the areas of Ethernet campus switch, Ethernet datacentre switch, and AI networks for AI workloads at Dell’Oro Group, notes that a combined HPE/Juniper would gain scale and greater market cloud in a number of sectors. It would become the number-four player in the combined datacentre and campus switch market with a market share of about 8%, taking it closer to Arista and Huawei but still a very long way behind market leader Cisco, which boasts a market share of 46%. 

In the enterprise campus network sector, HPE will gain from Juniper’s Mist portfolio, which is “recognised as the most cutting-edge AI-driven platform in the industry,” notes Boujelbene. “As AI capabilities increasingly define the competitive landscape for networking vendors, HPE stands to gain significantly from its access to the Mist platform… Juniper brings better ‘AI technology for networking’ to the table,” she adds. In addition, “Juniper has been focusing mostly on high-end enterprises whereas HPE has been playing mainly in commercial and mid-market. Therefore, from that standpoint, there should be a little overlap in the customer base” and a greater opportunity for cross-selling,” notes the analyst.

And in general, Juniper should benefit from HPE’s extensive channels and go-to-market strategy – about 95% of HPE’s business goes through channels, she adds.

But while there are plenty of positives, HPE will face a tough product portfolio management challenge, as there is  “substantial product overlap, evident across various domains, such as datacentre switching, campus switching, wireless LAN [WLAN, and security. Observing how HPE navigates the convergence of these diverse product lines will be intriguing. Ideally, the merged product portfolio should synergise to bolster the market share of the consolidated entities. Regrettably, history has shown that not all product integration and consolidation meet that desired outcome,” according to Boujelbene. 

Her colleague, Dell’Oro enterprise networking and security specialist Mauricio Sanchez, notes that while there is an overlap between the two vendors in the SD-WAN/SASE (secure access service edge) market, in which both companies have a combined single-vendor solution, it “should be straightforward to reconcile since HPE has a much larger business than Juniper,” in this particular part of the networking sector, which is a growing market now worth about $8bn a year. In the third quarter of 2023, HPE was the tenth-largest SASE vendor by revenue and its business was nearly four times larger than that of Juniper, which ranked eighteenth in the market. The threat here, though, is that HPE bungles the SASE integration “and falls further behind” the likes of Zscaler, Cisco and Palo Alto Networks.   

But beyond SASE, Juniper “extends HPE’s reach into the DDoS [distributed denial of service], firewall, cloud workload security, and distributed cloud networking markets,” notes Sanchez. 

And then there’s the enterprise wireless connectivity sector. Siân Morgan, who is responsible for the W LAN, and campus NaaS and public-cloud managed LAN market research programme at Dell’Oro, believes there is real potential for HPE/Juniper in the enterprise WLAN sector, even though a combined HPE (13% market share for its Aruba portfolio) and Juniper (4% market share for its Mist product line) would still be trail market leader Cisco, which is more than double their combined size in this market.

“Juniper Mist has been on a rocket ship trajectory over the past four years,” according to Morgan. “The company has been displacing Cisco and HPE with Fortune 100 companies that are becoming more open to public cloud-managed WLAN – the only architecture that Juniper offers. In contrast, HPE Aruba has been underperforming in cloud-managed WLAN, with market share hovering around the 6% mark… On the face of it, the two companies have WLAN solutions that compete head-to-head. However, each company has different strengths,” notes the analyst. “Whereas Juniper has been making waves with its AI-Ops network management engine, Aruba is known for its high-quality radio solutions,” and that makes for a compelling potential combination. 

“The biggest upside for Juniper Mist sales will be in the geographic reach that HPE can provide. HPE provides access to a larger volume of channel partners, and Juniper underperforms in all macro regions outside North America,” notes Morgan, who offers plenty more analysis of the enterprise wireless sector in this blog.   

- Ray Le Maistre, Editorial Director, TelecomTV