Juniper emphasized its laser-like focus as a core component of its success over the past 10 years - but attendees of its annual Analyst Day say it may have to defocus a bit in order to land more deals and regain market share.
Juniper kicked off its conference this week with press releases extolling its position as the overall No. 2 enterprise and service provider router vendor behind longtime leader Cisco. One release, citing market share data from Synergy Research, boasted that Juniper has achieved an impressive 30% share in high-end enterprise routing since the company's inception in 1996.
But such back patting didn't sway skeptical analysts, who grilled company executives on share lost recently to Alcatel in carrier edge routing, Juniper's lack of systems integration expertise for hot new markets like IP TV, and the absence of Ethernet switching products for aggregation at the carrier edge and expanding its presence in the enterprise market.
"They're growing revenue but losing business" in certain segments of the market, says Ron Westfall, an analyst at Current Analysis. Product and proficiency gaps are "lessening (Juniper's) ability to close more deals."
Some of those deals are going to Alcatel, whose market share in IP edge aggregation routing has shot up from 9.2% in the second quarter of 2005 to 25.6% in the fourth quarter, according to Synergy Research. In building that share, Alcatel has displaced Juniper as the No. 2 vendor in IP edge aggregation routing, according to Synergy.
Analysts pointed to a three-pronged strategy for Alcatel's recent success: an Ethernet aggregation switch to couple with an IP service router for IP TV deployments; a deep IP TV partnership with Microsoft; and systems integration expertise to tie all the components of an IP TV buildout together. They suggested Juniper will have to attain - or obtain - similar capabilities in order to compete with Alcatel and the recent marriage of Cisco and Scientific-Atlanta for these multibillion-dollar IP TV deals.
Juniper countered by claiming that the two largest IP TV networks in the world are deployed by service providers PCCW and FastWeb, both of whom are Juniper M-series and E-series router customers. Those products are therefore "the most production proven" for IP TV applications, says Judy Beningson, vice president of strategy and planning for Juniper's service provider business.
Juniper also says it is designing products for IP networks that support multiple services, not just video, because service providers are still uncertain which services will grow new revenue.
"I do think some customers built service-specific networks," says Kim Perdikou, general manager of Juniper's service provider business and executive vice-president of the company's Infrastructure Products Group. "But I do believe in the need to build multiservice networks."
Juniper espouses an IP video architecture that relies more on the dynamic bandwidth allocation capabilities of a router - specifically, Juniper's E320 router - than on the static assignments of Gigabit Ethernet aggregation switches. But when asked for a status report on the E320's traction in the market - especially the IP TV market - all Perdikou would say is that the router is "solid" and "takes a long time" to penetrate the market.
"We’re building for a future that's not even defined yet," she said of the E320.
Analysts, however, noted that Juniper partner Lucent's intention to acquire the assets of metro Ethernet router vendor Riverstone Networks underscored the glaring hole in Juniper's product line. Lucent resells Juniper routers but partnered with Riverstone last year for carrier triple play opportunities because Juniper lacked Ethernet switching and its low price points.
Lucent announced its intention to acquire Riverstone's assets last week.
Juniper dismissed the perception that it needed Ethernet switching and aggregation products in order to better compete in the triple play/IP video opportunities.
"Ethernet is not an architecture," said Chairman and CEO Scott Kriens. "Ethernet is an interface. Source and destination intelligence (housed in routers) will be increasingly accessed through Ethernet interfaces."
Still, analysts say Juniper needs Ethernet switching in order to provide a more complete portfolio for both service providers and enterprises, especially now that enterprise consists of 1/3 of Juniper's $2 billion annual revenue and grew faster than service provider in the fourth quarter.
"They'd be better off with Ethernet aggregation in their own (product) line," Westfall says. "The proof in the pudding is Lucent's acquisition of Riverstone. It would also be a logical addition to their security products in the enterprise."