Juniper: Secured & assured?

Despite its presence as one of the fastest-growing vendors on the NW200, Juniper is struggling to gain enterprise respect.

One year has passed since Juniper closed the books on its acquisition of VPN and intrusion-prevention vendor NetScreen Technologies , but the company has yet to parlay its year-old enterprise security presence into a broader corporate business.

Juniper's game plan calls for users of NetScreen's popular SSL and IPSec VPN and intrusion-prevention products to consider Juniper elsewhere in the enterprise. Toward that end, Juniper last summer introduced its first business-class WAN routers, the J-Series. But as of early April, Juniper had no J-Series account references it could share publicly. The company says only that a major bank, which uses NetScreen security products, has bought the WAN gear.

At the deal's one-year anniversary, industry watchers debate whether Juniper's $4 billion gambit was a smart move.

From a financial perspective, Juniper's recent sales history has been disappointing, says Nikos Theodosopoulos, a senior financial analyst with UBS Warburg. In the last quarter of last year, revenue from the NetScreen part of the business amounted to $99 million, he says. That's up from $94 million posted by NetScreen alone the quarter before Juniper bought it. "The question is," he says, " 'When will it resume the 30% to 40% growth NetScreen was showing before?'" he says.

Overall, though, Theodosopoulos considers Juniper a strong company - and in good shape to acquire the technology it needs. That's just what Juniper intends to do to get VoIP technology. In late March, the company signed a definitive agreement to acquire session border controller vendor Kagoor Networks for $67.5 million, plus options and other incentives. With Kagoor's technology, Juniper will be able to provide VoIP and other media services to network operators.

Juniper has more than $1 billion in cash and short-term investments, and its stock trades at higher relative values to its sales than do other network vendors, Theodosopoulos says. Juniper's price-per-earnings ratio is 84.96, while Cisco's is 22.7, for example. Plus, with NetScreen under its wing, Juniper has moved up 15 notches on the Network World 200, to 55.

From a user perspective, Juniper has a long way to go in changing the perception of the company from carrier-only to enterprise, too.

One user sums up the situation: "When I think of enterprise equipment, I think of a Cisco 6500. I don't think Juniper has anything comparable to that. In my mind, it really hasn't pushed into enterprise [routing] yet," says Jeff Murphy, senior communication system administrator for the University of Buffalo in New York.

No doubt, "we need to increase the awareness of Juniper as an enterprise company and as a security leader," says David Flynn, vice president of Juniper's security products group. "A lot of people say, 'Juniper, great products, great company,' but think of it still as more of a carrier-routing company."

Secured networking

To help shift the perception among enterprise buyers, Juniper has come up with a new tagline for itself - "the leader in secure and assured networking." With this tagline, Juniper hopes to convey that its infrastructure gear secures networks and delivers an assured user experience, Flynn says.

The Juniper-created Infranet Initiative , widely supported among application, computing and infrastructure vendors, fits the tagline. The Infranet Initiative is a framework for creating public networks that support QoS guarantees blended with application types and security for businesses connecting to these networks. But with this as the company's only published road map, speculation about what products Juniper might offer is rampant.

While Juniper says new enterprise products are on the way, it won't describe them or say when they will be ready to ship. That leaves potential business customers and industry watchers uncertain what to expect.

Juniper and the NW200

Revenue rank: 55, at $1.3 billion.

Profit rank: 43, at $136 million.

Cash and short-term investments: $1.1 billion.

Most are watching how Juniper positions itself against Cisco, and many question how well the Juniper routers possibly could fare against Cisco wares. Juniper doesn't offer the depth of add-on features that Cisco does in the 1700, 2600/2700 and 3600/3700 series routers against which the company is positioning the J-Series, says Joel Conover, an analyst with Current Analysis. For example, the Cisco routers can be software upgraded to become VoIP PBXs, while the Juniper routers can't.

Conover expects the company to enhance its technology lineup to provide a better-rounded corporate networking portfolio. In particular, he sees the lack of VoIP and wireless LAN gear as a big shortcoming. He adds that VoIP will be key to Juniper's enterprise success because corporations are most likely to undertake wholesale network upgrades when they plot their VoIP migrations. If Juniper were to support VoIP, it could win some of the upgrade business, he says. The Kagoor acquisition is a step in the right direction.

Plus, Conover says the Juniper routers aren't inexpensive. A Juniper J4300 ranges from $2,500 to $10,000 - not a low-end price. That compares with the six-slot Cisco 3600 router, which sells for $4,900 to $6,100. If enterprise users don't want to buy Cisco, they can get good, solid routers from vendors such as 3Com, Adtran and HP for significantly less than comparable Cisco models, Conover says.

Juniper will need to integrate intrusion prevention and other security technology into the routers to set them apart, he says.

But Zeus Kerravala, an analyst with The Yankee Group, says Juniper shouldn't try competing directly against Cisco product for product. That doesn't make sense, he says. "It needs to look at markets where it's known and has proven itself through the carriers," he says.

What Juniper ought to do is focus on supporting next-generation data centers that rely on high availability and secure, non-stop networking, he says. "That's its core competency," Kerravala says. Toward that end, he suggests Juniper needs high-end switches and load balancers along the lines of those made by Force10 Networks and Foundry Networks.

The bottom line

So where does this leave enterprise buyers? UBS Warburg's Theodosopoulos advises customers to hold off awhile before deciding whether Juniper has succeeded in its enterprise play. "It's kind of early to tell. We need at least another year of data."


Copyright © 2005 IDG Communications, Inc.

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