Is Juniper's enterprise strategy unraveling? Enterprise accounts for 35% of the company's business but consider these recent, or recently reported, developments:
- Looking to sell enterprise assets, including the NetScreen security business it acquired nine years ago for $4 billion;
- Declining revenue in its enterprise business. It was down almost 10% in the fourth quarter of 2012, and off almost 4% for 2012;
- Unremarkable "momentum" in Ethernet switching market share. Juniper's share has gained .5% over the past three years while Cisco has lost 4.5%, according to Dell'Oro Group. Somebody else is getting that business - HP and Huawei gained 2% and 1%, respectively;
- Continued share and revenue losses in security. In 2012, security sales in Juniper's Software Solutions Division were flat from 2011. In the Platform Systems Division, security sales were down 14.5%. And analysts say smaller challengers are ready to pounce on the missteps of the top three networks security vendors - Cisco, CheckPoint and Juniper:
"In the network security appliances and software market, vendors are actively jockeying to take advantage of competitor slip-ups," observes Jeff Wilson, principal analyst for security at Infonetics Research. "Challengers like Palo Alto, Fortinet, Sourcefire, and Dell SonicWALL will continue to make life interesting for Cisco, Check Point, and Juniper in 2013. When they find success, it will be because they exploit dis-satisfaction with the pricing, efficacy, performance, and feature breadth of the products from the top 3 vendors."
- A downgrade on Juniper stock to "Sell" given the implications of its lagging security business, competition from Cisco's Nexus 6000 switch and the disruption of software-defined networks, particularly to Juniper's hardware-dependent business. Cisco's stock was downgraded recently too, due in part to the implications of SDNs, but not to "Sell";
- And most recently, the upheaval in Juniper's switching portfolio with April's introduction of the EX9200 core switch, which appears to halt continued development of the four-year-old EX8200, and the not-quite-two-year-old QFabric.
Ten or so years ago, former Juniper CEO Scott Kriens used to say Juniper would not get into the enterprise business because doing so would put it in competition with its bread-and-butter service provider customers. Then shortly thereafter, Juniper bought NetScreen to get into the enterprise business through its security products and channels.
In 2008, Juniper deepened its insertion into the enterprise market by entering the Ethernet switching arena with the introduction of the EX line. Kriens rationalized the company's decision by saying the same DNA that allowed Juniper to steal 1/3 of the service provider routing market from Cisco in five years should allow it the same success in a mature, price-sensitive market again dominated by Cisco - even though seven other vendors before it continued to languish in sub-10% shares.
In five years in Ethernet switching, Juniper has been unable to duplicate the success it had in its first five years in service provider routing. The portfolio is in upheaval, QFabric and EX "classic" - the EX9200 is a rebranded MX router -- are essentially in maintenance mode, SDNs are ushering in a white box disruption, NetScreen might be for sale, investors recommend selling the stock, and reports are circulating that the Juniper board is demanding the company just go back and stick to its service provider knitting...
It looks like Juniper's nine-year foray into the enterprise wilderness has lost its way. Perhaps Scott Kriens should have heeded his own wisdom about not competing with his customers.
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