Industry awaits Juniper's next enterprise move

Juniper's entry into the enterprise market is based on much more than expanding its revenue opportunity.

A presence in this market is key to fulfilling Juniper's Infranet Initiative, an effort to coalesce the industry around standards for securely transacting business across the Internet and making money from IP services. One of the initiative's two chief standards-based components is an interface between corporations and the carrier network.

The enterprise market also is ripe for Juniper because there is no clear competitor to Cisco in enterprise networking. The companies chasing Cisco all have Ethernet switch market shares in the low- to mid-single digits compared with Cisco's 70%.

Juniper also would have a credible end-to-end offering to pitch against Cisco. The end-to-end system approach is more profitable than selling disparate boxes, analysts say.

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However, Juniper has a way to go to match the breadth of Cisco's LAN/WAN product line. The $4 billion acquisition of firewall and VPN vendor NetScreen Technologies early this year is only the first step.

"NetScreen provides us with the ability to secure the enterprise infrastructure," Pradeep Sindhu, Juniper vice chairman, founder and CTO, said during an interview with Network World two weeks ago, in which he explained NetScreen's role in the Infranet Initiative.

Another step is to make some enterprise infrastructure. That is also implicit in Juniper's Infranet Initiative.

"When you have to protect the infrastructure that's inside the enterprise network - these devices are going to live in the enterprise network, so to that extent, of course, we're addressing the enterprise market," Sindhu said.

Speculation within the industry has it that Juniper will more firmly root itself in the enterprise market through the acquisition of Ethernet LAN switch player Extreme Networks. And Juniper is believed to be close to unveiling a line of enterprise access and branch-office routers that utilize NetScreen's VPN and firewall capabilities.

It is unclear if these routers, code-named Pepsi, will have an initial version of the Infranet Initiative-standard interface. Juniper did not respond to requests for comments on Pepsi or Extreme.

Juniper's reported interest in Extreme is based on several factors: The other vendors - 3Com, Enterasys Networks, Foundry Net works, HP and Nortel - are either too big, too expensive, unhealthy or unfit. Extreme's market cap is a relatively affordable $700 million.

Also, Juniper has a relationship with Extreme.

"All of the ingredients are there," says Michael Howard, principal of Infonetics Research. "Extreme, NetScreen and Juniper have approached companies together, and have been working together for a long time."

Extreme also has a strategic alliance with Avaya that would give Juniper access to enterprise VoIP opportunities with Cisco's rival in that market. But Extreme wasn't Juniper's first choice, according to one analyst.

"I heard through the grapevine that they made a $500 million offer to Force10 [Networks], which Force10 turned down," says Zeus Kerravala, analyst with The Yankee Group.