Will Juniper acquire Riverbed?

In our industry, rumors of mergers and acquisitions pop up all the time. For example, after Cisco recently announced that it was entering the server business, there was a wide spread rumor that IBM would acquire Juniper. So far, that has not happened. There is, however, a new rumor making it way through the industry. That rumor is that Juniper will acquire Riverbed. We will use this newsletter to discuss our thoughts on that rumor.

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To understand the likelihood of the rumor coming true it is important to understand how we got to where we are. Part of that background is Juniper's not exactly stellar track record relative to network and application optimization. In 2005, Juniper acquired Redline, a middle-of-the-road vendor of application delivery controllers (ADC). Juniper marketed these products for a couple of years as their DX product line. Juniper had limited success with these products and when they dropped the product line, few people noticed.

At the time that Juniper acquired Redline, they also acquired Peribit – a leading provider of WAN optimization controllers (WOC) that they have since marketed as their WX product line. For a year or two after they acquired Peribit, the DX line was well regarded and had good market penetration. That market position has since eroded.

Part of the irony here is that it can be argued that earlier this decade Packeteer failed to evolve their products and that failure allowed the then start-up Peribit to come to market and become a leader. It could also be argued that Juniper's failure to better leverage its acquisition of Peribit was a major factor contributing to then start-up Riverbed coming to the market and becoming a leader.

So, will Juniper's failure to advance the Peribit products open the door for Juniper to now acquire Riverbed – the successor of Peribit? We doubt it in part because we don't see the two companies being a good fit. Although Riverbed certainly does sell into service providers, it is primarily a fast moving enterprise-focused company. Juniper's DNA is clearly in the service-provider market. In addition, the cost to of acquiring Riverbed would be very high – probably around $2 billion.

We do, however, think that Juniper might well do something. It could, for example, exit the WOC market the way it exited the ADC market. Alternatively, it could acquire another WOC vendor such as Expand Networks.

Steve Taylor is president of Distributed Networking Associates and publisher/editor-in-chief of Webtorials. Jim Metzler is vice president of Ashton, Metzler & Associates.