Juniper’s enterprise switch line in combination with its other enterprise-grade gear put it on better footing to compete against Cisco, according to a report by Lazard Capital Markets.
“The company’s recent entry into the switching market should enable it to outgrow the broader switching market as well as help drive sales of enterprise routers, network security and WAN optimization appliances,” the report says.
Short-term, then, Juniper can make inroads, but the question is whether it can significantly undermine established competitors, most notably Cisco, which owns more than two-thirds of the enterprise switching market.
“However, we doubt Cisco will allow Juniper to roam free within its bread and butter market without a fight,” the Lazard report goes on to say.
Juniper should not be taken lightly, however, given its success stripping away a third of Cisco’s carrier routing business after it came on the scene in 1997.
Lazard notes that 75% of Juniper’s revenues come from its carrier business and that Juniper can expect continued success in that sector. “Juniper should benefit from the build-out of next-generation networks driven by increased broadband demand,” the financial firm says.
“After losing modest market share in both the core and edge routing markets over the last couple of years, Juniper’s market share has shown signs of stabilizing after renewed investment and recent product introductions.”
But if it wants to continue growth on the same scale as for the past year or two, it must exploit enterprise business, Lazard says. “Juniper has been driving impressive operating margin expansion and earnings growth over the last several quarters, but the main lever for upside rests in the company’s barely profitable enterprise segment,” Lazard’s report says.
As the report headlines: “Enterprise initiative holds promise, execution is key.”
“We believe that Juniper has the potential to be a meaningful alternative to Cisco and could significantly increase the company’s footprint within the enterprise,” the report says.
